Chancellor pledges '110 measures' to grow economy

(Sharecast News) - The Chancellor has announced a raft of measures intended to boost business investment and grow the economy, including cutting business taxes and National Insurance. Delivering his Autumn Statement on Wednesday, Jeremy Hunt - citing the Office for Budget Responsibility - said the UK economy was set to grow by 0.6% this year, by 0.7% in 2024 and by 1.4% in 2025 before eventually reaching annual growth of 2% by 2027.

However, in March, the OBR forecast the economy would decline by 0.2% this year but grow by 1.8% in 2024 and by 2.5% in 2025. The watchdog cut its growth forecasts in response to inflation taking longer to come down.

Hunt told MPs: "After a global pandemic and energy crisis we have taken difficult decision to get our economy back on track.

"Rather than a recession the economy has grown...But the work is not done."

He therefore introduced a raft a measures - 110 in total - which he said would unlock supply side reforms and boost business investment by £20bn a year.

The main measure was the widely-trailed decision to make so-called full expensing permanent. Introduced as a temporary measure in 2021, it allows companies to reduce their tax bill by up to 25p for £1 they spend on plant and machinery.

The move, which will cost £11bn per year, was the "largest business tax cut in modern British history", said Hunt.

The OBR expects the policy to increase business investment by £3bn a year.

National insurance contributions were also overhauled. The 12% rate was cut to 10%, to be introduced from 6 January 2024, while Class 2 contributions, which are paid by self-employed people, were abolished.

Other measures announced include a shake-up of planning, to ensure faster decisions for infrastructure projects and major business application decisions, and extending the 75% business rates discount for hospitality, retail and leisure business for another year, at a cost of £4.3bn.

Hunt also committed to raise the pension by 8.5% to £221.20 per week, and said benefits would rise in line with inflation in September - 6.7% - rather than October's rate of 4.6%.

He concluded: "This is an Autumn statement for a country that has turned a corner, an Autumn statement for growth."

However, Rachel Reeves, shadow chancellor, said: "The chancellor has lifted the lid on 13 years of economic failure. The economy is now forecast to be £40bn smaller by 2027 than the chancellor said in March.

"The chancellor claims the economy has turned a corner...yet growth has hit a dead end."

As well as publishing growth forecasts, the OBR predicted that underlying debt would be 91.6% of GDP next year, 92.7% in 2024-45, 93.2% in 2026-27 and 92.8% in 2028-29.