Britain’s budget was a triumph over low expectations
to Parliament on March 15th by hailing improvements to Britain’s growth forecasts. Thanks to better global conditions and the government’s own economic policy the country would, he said, manage to avoid a technical recession in 2023 . Later Mr Hunt ran through the actual forecasts from the Office for Budget Responsibility , a fiscal watchdog: Britain’s economy would shrink by 0.2% in 2023 instead of the 1.4% contraction that it had predicted in November .
Such fiscal rectitude came despite tax cuts and spending increases. Mr Hunt announced an extension of the energy-price guarantee, a subsidy that keeps annual household energy bills at around £2,500 for a typical family; tax-free child-care vouchers for those with children between the ages of nine months and two years; and a change to investment allowances allowing large companies to offset all their capital spending on plant and equipment against their tax bill.
Such chicanery will, however, reduce the benefits of the policy. Mr Hunt billed his plan as a “budget for growth”. Thejudged him correct. Its number-crunchers estimated that Mr Hunt’s measures would raise economic growth by around 0.2% of, by boosting investment through tax breaks in the next few years and the labour supply when the child-care measures properly kick in after that. That would lower borrowing by £3bn in the next fiscal year and £1.
Instead, the improvements in Britain’s long-term growth outlook stem from expectations of greater labour supply. The biggest improvement is due to migration. Thehas, again, revised up its estimate of how many immigrants would come to work in Britain following the country’s departure from the. Net migration is forecast to add around 160,000 more workers. Of the 110,000 increase in the number of British workers that theattributes to the budget, about 75,000 are thanks to the child-care changes .
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