MARITIME UK BRIEFING: SPRING BUDGET 2023
Chancellor Jeremy Hunt delivered the Spring Budget 2023 statement to the House of Commons against a slightly less pessimist economic outlook, compared to the one leading up to the Autumn Statement less than six months ago.
- According to revised forecasts from the Office for Budget Responsibility (OBR), the UK economy will likely avoid a technical recession, contracting by 0.2% in 2023 before returning to growth of 1.8% in 2024, 2.5% in 2025, 2.1% in 2026, and 1.9% in 2027.
- The rate of inflation is forecast to fall to 2.9% by the end of 2023 from a record high of 10.7% at the end of 2022. At the same time, the unemployment rate will rise to 4.4% over the coming year, compared with the forecast in the Autumn Statement 2022.
- National debt will reach 92.4% of GDP in 2023/24, 93.7% in 2024/25, 94.6% in 2025/26, and 94.8% in 2026/27. At the same time, the budget deficit is expected to go from 4.5% of GDP to 0.0% over the same period.
- The limit on government department budget increases remains fixed at 1% for 2023/24.
- The Chancellor unveiled a temporary 3-year full capital expensing scheme for machinery and technology spending by businesses to replace the super deduction, as the corporation tax rate is set to increase from 19% to 25% in April 2023.
- The Budget explicitly acknowledges the importance of the UK’s maritime sector and outlines plans, from June 2023, to “open an election window to permit shipping companies that left the Tonnage Tax regime to return to the UK, bringing with them investment and jobs”.
- The fuel duty escalator was frozen for a thirteenth consecutive year, while alcohol duty is set to increase in line with inflation. However, duty on draught prices will be 11p lower in what Hunt dubbed the ‘Brexit Pub Guarantee’.
- The Chancellor announced 12 investment zones, aiming to support innovation across high-potential knowledge-intensive growth clusters across the UK – including one in each of the devolved nations. Each investment zone will have access to £80 million of support over five years.
- The Government confirmed up to £1billion of funding will be made available in the third round of the Levelling Up Fund, with another £400 million Levelling Up Partnerships (e.g., Redcar and Cleveland, Tyneside) and £200 million for local projects.
- Another £8.8 billion will be set aside for sustainable transport scheme and local authorities look set to take over strategic investment powers from local enterprise partnerships in 2024.
- The Government will make £20 billion of support available to early developers of Carbon Capture Usage and Storage (CCUS), which has the potential to add 50,000 high-skill new jobs to the economy and cut up to 30 million tons of C02.
- Hunt also announced that nuclear power will be classed as environmentally sustainable to enable the industry to access the same investment incentives as other energy sources, with a view to nuclear underpinning a quarter of total UK energy supply in the long term.
- Another key part of the budget focused on removing barriers to work and tackle the UK’s productivity conundrum.
- To achieve that, the Chancellor announced to allow people with disabilities and long-term health issue to seek work without losing access to the benefits system, as well as unveiling ‘returnerships’ for over 50s wishing to re-enter the workplace.
- The Chancellor abolished the lifetime pensions allowance and increased the tax-free yearly allowance for pension pots from £40,000 to £60,000.
- Hunt announced an expansion of free weekly childcare provision, with 30 hours of childcare extended to all children over 9 months of age with a staged introduction beginning in April 2023 – when 15 hours for 2 year olds will be offered.
- The Government aims to make this provision available to all children over 9 months from September 2025, having set aside £288 of funding to early years providers from next years to enact these reforms.