Spring statement 2022 – everything you need to know

Rishi Sunak, the Chancellor of the Exchequer since 2020, has recently delivered his highly anticipated mini budget as part of his Spring Statement 2022.

But what did Sunak’s Spring statement look like? And what does it mean for us all?

We’ve rounded up some of the key points highlighted and how Rishi Sunak’s changes on national insurance, fuel duty and income tax will affect consumers and businesses throughout the UK.

 

How will the cost of living be impacted?

Since the pandemic, many of us have faced financial difficulties or worried about the future, which is why the Sunak’s Spring Statement 2022 was much anticipated.

And here is what Sunak proposes when it comes to what the cost of living will look like over the next 12 months:

• Inflation would average 7.4% this year
• The government will cut to zero a 5% VAT rate for households installing solar panels, heat pumps or insulation.
• Sunak said he would double the government’s household support fund to £1bn.
• Fuel duty will be cut for only the second time in 20 years, by 5p a litre for a full 12 months.

 

What will borrowing look like?

Stating that “we should all be prepared for the economy and public finances to worsen potentially significantly,” Sunak went on to reveal how borrowing would be affected.

• The chancellor said debt service costs would rise to £83bn in the next fiscal year, the highest level on record.
• Public sector net debt was forecast to be 95.6% of GDP in 2021-22, and then to fall gradually to 83.1% of GDP by 2026-27.
• Borrowing in the current financial year, 2021-22, would be 5.4% of GDP, and would fall to 3.9% next year.
• In cash terms, the OBR estimated the budget deficit – the gap between spending and income – would be £127.8bn in 2021-22, and £99.1bn next year.

 

Business Investment

During the announcement of the Spring statement, Sunak states that: “something is not working” with UK investment in productivity and went on to outline the following changes:

• Sunak announced changes to research and development tax credits, saying the generosity of reliefs for business investment would be increased to boost UK productivity.
• He said the government would cut tax rates on business investment at the autumn budget.
• The chancellor said he would increase the employment allowance for small businesses to £5,000

 

Sunak also made it clear that a 1.25-percentage-point rise in national insurance contributions will remain. The basic rate of income tax would be cut from 20% to 19% in 2024.

 

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