In his second Budget of the year, Chancellor Rishi Sunak leaned heavily on his prospect of a brighter economic outlook.
Mr. Sunak declared the UK economy is entering a “new age of optimism” before unveiling an overhaul of taxes on alcohol, businesses, air travel and poorer families.
Here’s a flash round-up of what was announced in the Autumn Budget 2021:
- The Office for Budget Responsibility (OBR) revealed a stronger-than-expected economic and borrowing recovery from the Covid crisis
- OBR say that GDP will rise 6.5% this year and return to pre-covid levels by the end of the year while unemployment will peak at 5.2%
- Borrowing to fall from 7.9% of GDP this year to 3.3% in 2022 and 2.4% in 2023
- Consumer Price Inflation (CPI) to average 4% over next year
- Two new fiscal rules announced – public debt must be falling within three years (as a % of GDP), while day to day spending must be paid through taxes rather than borrowing.
- Chancellor pledge to reduce tax by the end of this Parliament
- Cut to Universal Credit taper rate by 8% from no later than December 1, bringing it down from 63% to 55%
- Freeze to fuel duty
- Planned increase in alcohol duty cancelled and rates simplified. A “draught relief” will cut the cost of a pint of draught beer and cider by 3p
- Air passenger duty to be lowered on domestic flights from April 2023
- £1m annual investment allowance to be extended from the end of the year to March 2023
- Extended business rates relief for businesses in retail, hospitality and leisure. They will be able to claim a 50% discount on their bills, up to £100,000
- A relief on investments in green technology plus more frequent revaluations on business rates.
- National Living Wage will rise to £9.50 / hour from April 2022, up from £8.91 – a 6.6% rise
- An end to the public sector pay freeze.
Skills and Investment
- £1.4bn to be set aside for a Global Britain Investment Fund
- The British Business Bank’s regional financing programmes to be increased to £1.6bn
- Expansion of Research & Development tax credits
- Increased Treasury spending on skills boosting, including a £560m Multiply scheme to improve adult numeracy.
- Total department spending will rise by 3.8% a year in real terms
- Health care spending to increase by £44bn to over £177bn by the end of this parliament, funded by NI hike (already announced)
- International aid spending on track to return to 0.7% of GDP in 2024-25
- £5bn allocated to remove unsafe cladding, partly funded by a Residential Property Developers Tax
- Schools to receive an extra £4.7bn by 2024-25
- Devolved administrations funding to increase to Scotland, Wales and Northern Ireland
- £2.6bn pledged for road upgrades
- Boost in Research & Development funding and core science funding.
Full Budget Report
Our full report of all the measures announced in the October 27th Budget and Spending Review is now available for download. Click here for your free copy.