UK Chancellor Jeremy Hunt has outlined the government’s financial plans for the year ahead in a press conference. Euronews Business breaks down the key announcements.
Chancellor of the Exchequer, Jeremy Hunt, has shared the UK government's economic plans for 2024. Here's a look at some of the key takeaways.
Hunt pledged that benefits will increase next year by 6.7%, which was the inflation rate level for September.
This amounts to an average increase of £470 (€540) for 5.5 million households next year.
He said that this applies to means-tested benefits such as Universal Credit and disability benefits.
In October, headline inflation came in at an annual 4.6% in October. It marked the lowest reading in two years. However, it remains well above the Bank of England's 2% inflation target.
Hunt also confirmed that the local housing allowance will be increased to give 1.6 million households an average of £800 of support next year.
The chancellor also announced that the full new state pension will rise by 8.5% to £221.20 per week from April 2024, which is worth up to £900 per year for pensioners.
Hunt highlighted that, including today’s measures, it takes this government’s “total commitment to easing cost of living pressures” to £104 billion.
"That is one of the largest ever cash increases to the state pension - showing a Conservative government will always back our pensioners," he said.
The government will also honour its commitment to the pensions triple lock in full.
Under the triple lock policy, state pensions are supposed to increase each April in line with the highest of one of three things: either the inflation rate, average earnings, or 2.5%.
The government will invest £500 million over the next two years to fund more "innovation centres" to help make the UK an "AI powerhouse".
This, Hunt said, follows "the success of the supercomputing centres in Edinburgh and Bristol".
The Chancellor of the Exchequer - the UK equivalent of finance minister - highlighted a £4.5 billion boost to manufacturing until 2030.
He emphasised a strategic investment in key sectors, such as aerospace, life sciences and the burgeoning green industry, with allocations of £975 million, £520 million, and £960 million, respectively.
The government will meet its NATO commitment to spend 2% of GDP on defence.
Hunt said this is "critical at a time of global threats to the international order most notably from Putin’s evil war in Ukraine".
Addressing the alarming anti-semitic rise in the UK, Hunt unveiled a dedicated initiative, allocating £7 million over the next three years to organisations like the Holocaust Education Trust.
The primary focus is on combating anti-semitism in educational institutions, such as schools and universities, asserting the imperative of preventing any regression in the fight against anti-semitism and all forms of racism, the Chancellor added.
Taxes for the self-employed will also be cut and reformed. From April 2024, Class 4 National Insurance Contributions (NICs) for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs, saving the average self-employed person on £28,200 a year £350 in 2024/25, Hunt said.
Taken together, he noted, it is a tax cut of over £9 billion per year and represents the largest ever cut to employee and self-employed National Insurance. The independent Office for Budget Responsibility (OBR) said these reductions will lead to an additional 28,000 people entering work.
National Insurance contributions
National insurance will also be generally cut by two percentage points, the chancellor announced.
In a boost to employee's pay packets, Jeremy Hunt told the Commons that the main 12% insurance rate would fall to 10% from 6 January - saving those on an average salary of £35,000 over £450 a year.
Business rate changes
The Chancellor also underscored the government's commitment to supporting small businesses.
A business rates support package worth £4.3 billion over the next 5 years will help high streets and protect those small businesses that are the backbones of communities, Hunt outlined.
This includes a rollover of 75% Retail, Hospitality and Leisure relief for 230,000 properties and a freeze to the small business multiplier, which will protect around 90% of ratepayers for a fourth consecutive year.
Moreover, SMEs will be supported with tougher regulation on late payers to improve prompt payments, the expansion of Made Smarter in Great Britain and continued funding for Help to Grow.