Jeremy Hunt is announcing his financial update – here are the main points, with political analysis
Jeremy Hunt says the UK economy has dealt with the financial crisis, the pandemic and energy crisis caused by war in Europe. He acknowledges that interest rates “remain high as we bring down inflation”, but adds: “We can now help families not just with cost of living support but with permanent cuts in taxation.” He calls it a “budget for long term growth”.
Inflation is expected to fall below the government’s 2% target in “just a few months’ time”, Hunt says, down from 4% in January. “Nearly a whole year earlier than forecast in the autumn statement,” he adds.
The Bank of England’s long-term target is to keep inflation at a “low and stable” 2%.
The figure is down sharply from the 11.1% when Hunt and Rishi Sunak took office in 2022, as inflation in food and energy prices have eased.
Alcohol duty was due to rise by 3% from August but Hunt said it will be frozen until February 2025, benefiting 38,000 pubs across the UK. The government is “backing the great British pub”, Hunt says.
Hunt said he would freeze fuel duty at its current level for another year, as expected. The levy should rise in line with inflation but this has not happened since 2011.
A 5p cut to fuel duty, which was introduced in 2022 and is due to run out this month, has been extended.
Hunt says underlying debt, which excludes Bank of England debt, will be 91.7% in 2024-25 according to the OBR, then 92.8%, 93.2%, 93.2% before falling to 92.9% in 2028-29. “We continue to have the second lowest level of government debt in the G7, lower than Japan, France or the US,” he adds.
Hunt says borrowing falls from 4.2% of GDP in 2023-24, to 3.1%, 2.7%, 2.3%, 1.6% and 1.2% in 2028-29. “By the end of the forecast, borrowing is at its lowest level of GDP since 2001,” he adds.
