Spring Budget 2024 - PwC’s Chief Economist says the Chancellor is ‘close to breaking his own rules’

Barret Kupelian, Chief Economist at PwC, says:

“This Spring Statement was Westminster’s worst kept secret - most of the policies were leaked ahead of time and there were no major surprising changes to tax policy. So what were the Chancellor’s headline grabbing policies and what does this mean for the UK economy? 

“Much like the Autumn Statement, the Chancellor focused on tax cuts, with his flagship policy focused on reducing national insurance contributions by a further two percentage points - a policy that is cheaper and more targeted than reducing income tax.

“However, as his starting headroom was limited, he did what most Chancellors are famous for - take with one hand and give with the other - to further fund his tax cuts. The most notable revenue raising measures he announced were around taxing on non-domiciled individuals, tobacco and vaping products, extending the energy profits levy and adjusting the Air Passenger Duty. 

“On balance though, this means that the Chancellor’s headroom at the end of the fiscal period is very limited and thus is dangerously close to breaking his own rules. The OBR expects around £9 billion of headroom to remain - if fuel duty remains frozen, this would get it down to £4.5 billion, which is virtually a rounding error. 

“Overall, working people, parents, regular pub goers, real estate agents and Keira Knightley were the winners from this Budget, whilst smokers, non-domiciled individuals and unprotected government departments were the losers.

“No rabbit, no hat - a no surprises Budget that certainly did not feel like a pre-election fiscal event. While there was a bit of tinkering by the Chancellor, the announcements today will not shift the dial significantly in terms of the UK economy, with the Chancellor opting against a big Budget crescendo.”