The Chancellor of the Exchequer has delivered their first Budget, describing it as "a Budget for the working people of Britain" and for British businesses large and small. According to the Chancellor's statement, the Budget is built on fiscal discipline and matches immediate action with clear direction for the future.
Key points
- Fiscal rules met — The Chancellor confirmed both the stability rule and the investment rule are satisfied, with headroom of £15bn in 2029/30.
- Borrowing falls — Borrowing is forecast to drop from 4.4% of GDP last year to 4.2% this year and 1.8% by 2030/31.
- No tax rise for working people — The Chancellor rejected broad-based tax increases and cuts to public services.
- Global pressures — Oil prices have risen from around $70 to over $100 a barrel, and gas prices have nearly tripled since February.
The Chancellor said the country faces "global economic storms", with trade tensions dragging on global growth and the war in Ukraine approaching the end of its fifth year. The Office for Budget Responsibility identified the conflict in the Middle East as a key driver of its forecasts, and the government continues to work with allies to restore shipping through the Strait of Hormuz.
Inflation, which had been expected to fall to the 2% target earlier this year, has instead risen due to higher oil and gas prices. For families this means higher pump prices, energy bills and mortgages, while businesses face increased running costs and more expensive loans. Government borrowing costs across the G7 are at highs not seen for decades, and the OBR predicts £14bn more will be spent on debt interest this year.
The Chancellor paid tribute to their predecessor, Britain's first female Chancellor after 800 years, crediting her with bringing fiscal discipline and taking decisions to boost investment, cut NHS waiting lists and lift half a million children out of poverty. The International Monetary Fund has said the UK "stands out" as a country where action to reduce debt and deficit has been taken decisively, projecting the UK deficit will be the lowest in the G7 by 2029.
What it means in practice
The Chancellor has chosen to use headroom built up last year to shield households and businesses from the worst of rising global costs, rather than raising taxes or cutting services. For most people, the immediate effect is that there is no new tax hit on working people, but energy bills and mortgage costs will remain under pressure from global factors beyond the government's control.
- Energy bills — Gas prices have nearly tripled since February, so households should expect continued pressure on bills and budget accordingly.
- Borrowing costs — Higher government debt interest means less room for spending elsewhere, which could affect future public service funding decisions.
- Business costs — Firms facing more expensive loans and running costs will be watching whether the promised breathing space materialises in practice.
