Chancellor Jeremy Hunt is expected to unveil a 2p cut to national insurance in his Budget on Wednesday. This move is anticipated as an attempt to attract voters ahead of this year’s general election, as the Conservatives look to close the opinion poll deficit with Labour.
Hints of the Budget reveal point to a focus on employment taxes, with this being the chancellor’s second reduction in employment taxes in a year, after cutting national insurance by 2p in the last year’s autumn statement. The anticipated announcement of another cut to national insurance, instead of a 2p reduction in income tax, is expected to have an impact on opinions in the lead-up to the election.
The impact of this proposed change is of great interest, as the biggest net beneficiaries of a 2p cut in national insurance would be workers earning £50,000 or more. It is a move that could have profound implications for a large section of the workforce, particularly those in higher income brackets.
The overall state of the economy is also a key focus of the upcoming Budget. Chancellor Hunt’s language about the economy having “turned a corner on inflation” and a potential turnaround on growth is generating significant attention. It is an argument that will be heavily contested, with Labour expected to emphasize that despite any positive economic indicators, many individuals still feel worse off than they did when the Conservatives first came to power in 2010.
In terms of key budget points outlined by Hunt, it was detailed that Scotland is set to receive an extra £300m, Wales an additional £170m, and Northern Ireland £100m under the Barnett Formula. Moreover, plans for full expensing for businesses, applicable to leased assets in the future “when affordable,” are set to be published in a Draft Bill soon. The Office for Budget Responsibility’s predictions for UK GDP growth in 2024 and 2025 are also highlighted, with the anticipation of 0.8% and 1.9% growth, respectively.
The budget announcement is significant not just for the immediate implications it carries, but also for the positioning it provides ahead of the upcoming general election. Both conservatives and labour are making strategic moves in the hope of appealing to voters, with economic policies such as national insurance cuts and growth projections central to this political posturing.
