UK unveils cost-of-living budget with focus on childcare, pensions and welfare

British finance minister Jeremy Hunt on Wednesday unveiled the spring budget as the United Kingdom said that the cost-of-living support for this year and next will total $114 billion. As per the government, the forecast is that the economy would avoid recession this year as inflation slows sharply.

Hunt hopes that he will speed up the nation's stagnating economy with the budget plans, including extra support for energy bills, childcare and pension reforms. He expects more people to work and corporate tax breaks to boost weak business investment.

Chancellor of the Exchequer Hunt told parliament that high inflation is the root cause of the strikes we have seen in recent months and the government will continue to work hard to settle those disputes. He mentioned that government policies will focus on not fueling inflation.

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UK inflation remains above 10 per cent but should cool to 2.9 per cent by year-end, Hunt said. "The UK will not... enter a technical recession this year," he added after the economy narrowly avoided two successive quarters of contraction in 2022.

The British finance minister announced 12 new investment zones. Citing Canary Wharf's example, he said that there will be in: the West Midlands, Greater Manchester, the north-east, South Yorkshire, West Yorkshire, East Midlands, Teesside, and Liverpool. There will also be at least one in Scotland, Wales and Northern Ireland.

Investment on defence

The British finance minister said that the government will add a total of £11bn to the defence budget over the next five years and it will be nearly 2.25% of GDP by 2025. He said, "We were the first large European country to commit to 2% of GDP for defence and will raise that to 2.5% as soon as fiscal and economic circumstances allow."

Pension reforms

The government announced reforming the pensions lifetime allowance, annual allowance and money purchase annual allowance to encourage highly-skilled workers, such as senior NHS doctors, to remain in the labour market, and help tackle NHS waiting lists.

"So today I will increase the pensions annual tax free allowance by 50%, from 40,000 to 60,000 (pounds). Some have also asked me to increase the lifetime allowance from its £1 million limit, but I've decide not to do that. Instead, I will go further and abolish the lifetime allowance altogether. It is a pension tax reform that will stop over 80% of NHS doctors from receiving a tax charge," Hunt said.

Voice of opposition leader

Uk's opposition Labour leader Keir Starmer argued this was a "permanent tax cut... for the richest one percent" as many did not have enough income to benefit.

"According to the IMF, the worst performing country in the G7 this year. A prediction today confirmed by the OBR and growth downgraded in years to come," Starmer said.

(With inputs from agencies)

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