2023 United Kingdom budget

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The 2023 United Kingdom Budget — a short, simple summary

On 15 March 2023, Chancellor Jeremy Hunt delivered the full UK budget to Parliament. It was the first full budget Hunt presented since becoming chancellor and the first since the 2021 budget by then-chancellor Rishi Sunak. Hunt called it a budget for growth, aiming to set the country on a path to long‑term, sustainable economic growth. At the time, inflation was still high and many families faced a cost‑of‑living squeeze, though there were early signs of recovery after a tough winter.

What Hunt announced
- Jobs and work: measures to remove barriers to employment, including more free childcare.
- Business and investment: a package of tax cuts worth about £27 billion to encourage business investment and growth.
- Skills and shortages: steps to help with labor shortages in industries such as construction.
- Energy costs: the Energy Price Guarantee was extended for three months, helping households with energy bills.
- Pensions: the cap on the lifetime allowance for tax‑free pension contributions was abolished to encourage people to stay in work longer, including NHS staff.
- Overall goal: a plan to grow the economy and improve living standards over time.

The economic context
- The UK had narrowly avoided a recession at the end of 2022; the budget looked to keep growth going in 2023.
- The Office for Budget Responsibility forecast that the economy would not fall into recession in 2023, but might shrink slightly that year (about -0.2%). Growth was expected to pick up in later years: about 1.8% in 2024, 2.5% in 2025, and 2.1% in 2026.
- Inflation was expected to fall from around 10% in late 2022 toward about 2.9% by the end of 2023.
- Debt was forecast to be around 92.4% of GDP in 2023, rising to about 93.7% in 2024.
- Borrowing for 2022–23 was forecast at about £152 billion, but later data showed it came in lower, around £139.2 billion.

Reactions and debate
- Labour leader Keir Starmer criticised the budget, arguing it would leave the UK lagging and calling it a return to economic weakness.
- Labour’s Rachel Reeves said the party would reverse the pension changes and would instead design a doctors’ scheme to suit NHS staff.
- The British Medical Association welcomed the pension changes as potentially transformative for the NHS.
- The Scottish and Welsh leaders and other critics argued more help was needed for families, and some Conservative MPs questioned parts of the plan, such as a rise in Corporation Tax.
- The BBC noted some measures, like expanded childcare, might be hard to deliver in practice and could be politically costly if promised benefits didn’t materialise.

What happened after the budget
- In late March 2023, inflation rose again slightly, and the Bank of England raised interest rates to 4.25%.
- Growth data for late 2022 were revised to show the UK avoided recession after all.
- By 25 April 2023, official figures showed borrowing for the year to March 2023 was about £139.2 billion, lower than the earlier forecast.
- In January 2024, the government opened applications for 15 hours a week of funded childcare for two-year-olds, starting in April 2024.