In response to Chancellor Jeremy Hunt’s 2023 Spring Budget speech, the Institute for Fiscal Studies (IFS) stated that a ‘whole range of policy levers’ were pulled in an effort to stimulate economic growth.
The business group said in its initial response that the expansion of free childcare for children over the age of nine months should help ‘tens of thousands of parents into work, provided that it is appropriately funded’.
The changes to capital allowances, which will permit businesses to be able to deduct 100% of all plant and machinery investment spending immediately when calculating taxable profits, were also praised. The Institute for Fiscal Studies (IFS) said that the measure should help to ‘boost business investment in the short run’
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However, the Institute for Fiscal Studies (IFS) said what the Chancellor didn’t announce was ‘just as notable’. It was critical of the absence of funding to improve the pay offer to striking public-sector workers, and personal tax rises set to take effect from April will mean an extra £500 in tax for basic rate taxpayers in 2023/24 and an extra £1,000 for higher rate taxpayers.
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‘The bigger fiscal picture hasn’t changed enormously since the autumn,’ said Paul Johnson, Director of the Institute for Fiscal Studies (IFS).
‘The government remains on track to meet its relatively loose fiscal targets by only the barest of margins.
‘Debt interest spending is forecast to remain well above what was forecast a year ago. And we are still in the midst of an enormously difficult period for households. We’re by no means out of the woods yet.’