paying national insurance, were among several key points in the minister’s spring mini budget amid the fastest rise in cost of living in 30 years, as the annual inflation rate reached 6.2 per cent.
According to the Office for Budget Responsibility, United Kingdom’s economy is projected to grow by 3.8 per cent this year, a sharp decline from the previous forecast of 6 per cent. Meanwhile, inflation was 6.2 per cent in February, and is expected to average 7.4 per cent for the rest of 2022 but with an 8.7 per cent peak in the final quarter of the year. The country’s debt as a percentage of GDP is also projected to decline from 83.5 per cent in 2022/23 to 79.8 per cent in 2026/27. On the other hand, the government’s expenditure on debt interest is expected to reach £83 billion over the next financial year, the highest on record.
Meanwhile, Sunak announced a fuel duty cut of 5p per litre until March next year, as energy bills continue to rise at a record level. A VAT cut has also been introduced for homeowners installing solar panels, heat pumps and other energy efficiency materials. Duty on them will be slashes from 5 per cent to zero for five years. The government has also decided to create a £1 billion fund to help vulnerable households with rising living costs. Accordingly, local authorities will receive another £500 million for the Household Support Fund from next month.
Another key point in the Spring Statement is the raise of the income threshold for at which point people start paying National Insurance. According to the chancellor, from July, the rate at which workers start paying national insurance would be £12,570, thereby providing employees with a tax cut worth over £330 a year. The Minister also pledged to slash the basic rate of income tax to 19p, from the current 20p, while the Employment Allowance was hiked from £4,000 to £5,000 from April, under the mini budget.
