Spring Budget 2022
A Targeted Budget
Amid soaring inflation of 6.2% and forecasts of the sharpest fall in living standards since records began (according to the UK’s fiscal watchdog), Rishi Sunak presented a Budget which he argued would support the UK economy, businesses and families in both the short and the medium term. In contrast to the profligate Budgets of very recent times, which were arguably necessary to address a pandemic that affected all areas of the economy from all angles, this was a targeted Budget with a laser beam pointed at the erosion of disposable incomes that is likely to pursue at least in the short term.
The key measures were as follows:
- regarding personal taxes, an increase to the threshold at which an individual will begin to pay NI from 6 July 2022, aligning it with the personal allowance which is set at £12,570 per annum
- regarding employment taxes, the Employment Allowance will be increased by £1,000 from 6 April 2022 to £5,000
- regarding duties, an immediate reduction in duty on diesel and petrol, by 5 pence per litre, for 12 months
- regarding VAT, a cut in the VAT levied on energy efficient upgrades, such as solar panels and energy efficient heating
Rishi Sunak saved the “crowd pleaser”, or “low-tax-Conservative-MPs-and-commentators pleaser” until the end – his virtual rabbit out of the hat, by promising to cut the basic rate of income tax to 19p in the pound in April 2024, conveniently a few weeks before many Tory MPs expect to face a general election. Rishi has kept what looks to be substantial powder for more election-fighting fireworks. Has he done enough for the poorest people in society? Having banked most of the fiscal good news he received – higher than expected growth and tax revenues this year – he could have gone further. He is building up a war chest for the autumn. Momentum politics.
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