The Chancellor Jeremy Hunt set out his fiscal priorities in the spring statement, delivered against a slightly rosier economic backdrop than his autumn budget.
Here are the big announcements at a glance…
Cost of living support
Hunt confirmed that the energy price guarantee will remain at £2,500 until July – it had been set to rise to £3,000. He says the measure would save the average family £160.
He also announced extra help for those with prepayment meters, saying he will “bring their charges in line with comparable direct debit charges”. The government estimates this could save four million struggling households around £45 a year on energy bills.
Fuel duty has been frozen for another year, and free childcare of 30 hours a week for working parents will be expanded to cover one and two-year-olds.
Hunt also announced a £63m fund to help leisure centres and pools afford their energy bills, and £100m extra for charities facing soaring costs.
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The Office for Budget Responsibility predicts the UK will avoid recession, meaning the economy has slowed for two quarters in a row, in 2023.
The UK’s inflation rate is predicted to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022.
Hunt said that by the end of the forecast period, the government’s current budget deficit – day-to-day spending minus tax revenues – will be in surplus.
He said the OBR is expecting that he will meet his fiscal rule of keeping public sector net borrowing below 3% of GDP, with £39.2bn to spare, by the end of the forecast.
Underlying debt forecast to be 92.4% of GDP next year, rising to 93.7% in 2024-25.
Hunt abolished the pensions lifetime allowance, having previously been set at £1.07 million, in an attempt to reduce the temptation of early retirement for professionals in their 50s. The policy will help an estimated 1.2 million people avoid paying extra tax when drawing on their pension pot.
The government will also raise the annual allowance — the amount people can save each year before incurring tax — from £40,000 to £60,000. The combined cost of the increased allowances is expected to be £2 billion a year.
Business, trade and levelling up
Hunt announced plans to create a dozen new investment zones that could become “12 potential Canary Wharfs”.
He said areas including the West Midlands, Greater Manchester, Liverpool and Teesside had been identified as possible hosts, and they will need to develop proposals centred around universities or research institutes.
Successful applicants will be given £80m of support over the next five years, and allowed to retain some local taxes.
Hunt also announced an extra £400m for “levelling up partnerships” in areas including Redcar and Cleveland and Rochdale, as well as confirming the next round of city region transport settlements, which will be worth £8.8bn over five years.
He confirmed that the West Midlands and Greater Manchester will get new multi-year devolution funding deals, and be allowed to retain business rates.
On the trade front, there will be reduced paperwork for international traders, who will also be given longer to submit customs forms under streamlined rules.
Hunt said defence funding has been increased by £11 billion over the next five years and it will reach 2.25 per cent of GDP by 2025. The boost will still mean that the government falls short of a target to spend 3% of GDP on defence.
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