| Chancellor Jeremy Hunt sought on Wednesday to revitalise Britain’s stagnating economy with a mix of childcare and pension reforms to tempt people back to work, and £9 billion in corporate tax breaks to boost weak business investment.
“In the autumn we took difficult decisions to deliver stability and sound money,” said Mr Hunt, who was rushed into the Treasury last October to undo the plans for tax cuts that sowedAdvertisement Mr Hunt and Prime Minister Rishi Sunak announced tax breaks for business investment but resisted calls from some lawmakers in their Conservative Party for big tax cuts now to ease the heaviest tax burden on the economy since World War II.
In a bid to speed up growth, Mr Hunt expanded free childcare to children under two in England as a way to get more parents of young children into work. Campaigners said the £4 billion of annual funding would not meet demand.Other measures to boost the size of the workforce included the end of penalties for people breaking thresholds on pension contributions, an attempt to keep more older people in their jobs, and welfare changes to encourage disabled people to work.
The OBR said the change would not cushion all the pain for companies, as a leap in the corporation tax rate next month will represent the heaviest burden on businesses since the levy was introduced in 1965. Mr Hunt said the government would add £11 billion to the defence budget – which has been stretched by Britain’s support for Ukraine in its war with Russia – over the next five years.A new set of economic forecasts showed gross domestic product was set to shrink by 0.2 per cent in 2023 rather than contract by 1.4 per cent as projected by the OBR in November.