UK Spring Budget 2023
The much-anticipated Spring Budget focused on three main areas: childcare, business tax cuts and the cost-of-living crisis. Hailed as the “budget for growth”, The Chancellor confirmed that the latest Office for Budget Responsibility (OBR) forecast shows that “the UK is on the right track” and will not enter a technical recession this year. He also revealed that despite continuing global instability, the latest OBR report confirmed today that UK inflation will more than half by the end of 2023.
The Chancellor’s pledge to “remove[ing] obstacles that stopped businesses investing” and “harness[ing] the British ingenuity that makes Britain a science and technology superpower” will be welcomed by international and tech businesses investing in the UK. The move towards classing nuclear power as environmentally sustainable will also encourage private sector investment into British nuclear programmes. Below is our summary of key announcements.
Those businesses looking to invest in life sciences, innovative tech, and manufacturing and who locate themselves outside of London are the biggest winners from the UK’s Spring Budget. Although it is not as radical as some of the announcements under the former Prime Minister Liz Truss MP, it does appear that the Chancellor is trying to keep the more free-market wing of the Conservative Party onside without causing market turbulence and playing to other key factions within the Party including the hawks and the ‘Red Wall’ MPs known as the Northern Research Group (NRG). This is why there is a lot of focus on increased sovereign capabilities and increasing investment outside of the ‘Golden Triangle’ of Oxford, London, and Cambridge.
The UK Government has set out key growth sectors which it will prioritise in the announcements for the Autumn Budget later this year. Those are:
- Green industries including nuclear, hydrogen, and CCUS.
- Digital technologies including AI, quantum, and web technologies.
- Life sciences including quick market access for innovative medicines approved by the UK's international partners.
- Creative industries will see cultural tax relief and government support.
- Advanced manufacturing especially those investing in more equipment and sites outside of the new Investment Zones.
“Increasing nuclear capacity is vital to meet our Net Zero obligations.”
- Allocating up to £20 billion of support for the early development of Carbon Capture Usage and Storage (CCUS).
- Launch of Great British Nuclear, which will enable nuclear projects, support the UK’S nuclear industry and provide opportunities to build and invest.
- Launched an open competition for Small Modular Reactors (SMRs), where companies such as Rolls-Royce can put forward their technology as candidates to receive funding.
- Confirmed the Energy Price Guarantee will continue at the same level until July 2023.
- Extend the Climate Change Agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures.
Defence and Foreign Affairs
“I am proud we are giving the brave people of Ukraine more military support than anyone else in Europe.”
- Committed to raise the defence budget by £11 billion over the next five years.
- Pledged to increase defence spending to 2.5pc of GDP, up from the Nato minimum of 2pc, when economic and fiscal circumstances allow.
- £11.5 million employment support package for Ukrainians will provide employment support for those fleeing the war who have arrived in the UK under the Ukraine Visa Schemes.
- Additional £33 million to help veterans over the next three years for extra housing and supporting veterans with specialist care for physical injuries.
Technology and manufacturing
“We want the UK to be the best place in Europe for companies to locate, invest and grow so today’s enterprise measures strengthen our technology and life science sectors.”
- Accepted all nine of Sir Patrick Vallance’s recommendations to better regulate the digital technologies of the future.
- £900 million of funding for an AI Research Resource and an exascale computer – making the UK one of only a handful of countries to have one.
- Annual prize of £1 million awarded to the person or team that does the most groundbreaking AI research, called The Manchester Prize.
- Committed to £2.5 billion ten-year quantum research and innovation programme through the government’s new Quantum Strategy.
Transport and Automotive
“Having listened to the case for better local transport infrastructure from many hon members, I can announce a second round of the City Region Sustainable Transport Settlements.”
- The planned increase of 11p in fuel duty this year will be cancelled and rates will be kept the same for the next 12 months – a saving worth around £5 billion to drivers.
- Confirmed £8.8 billion for additional local transport funding in England.
Business Taxes and Rates
“Of all European countries, we are the best country to do business.”
- A £27 billion tax cut for businesses through a radical full expensing policy and capital allowances reform, which will drive investment and growth.
- New policy of full expensing will be introduced for the next three years to boost business investment in an effective cut to corporation tax of £9 billion per year – the UK will be the only European country to have this policy.
- Increased annual investment allowance for small businesses to £1 million.
- Reformed pension tax limits – enabling highly skilled workers, like doctors, to keep working.
- Pledged tax relief for the UK’s world-famous creative sectors.
Health and Social Care
“Today’s change will make the UK an even more exciting place to invest – as well as speeding up access for NHS patients to the very newest drugs.”
- The Medicines and Healthcare products Regulatory Agency (MHRA) will receive £10 million extra funding over two years to maximise its use of Brexit freedoms and accelerate patient access to treatments.
“British ale may be warm, but the duty on a pint is frozen”.
- Beer and other draught products in pubs will be 11p cheaper than in supermarkets after April 1.
- The duty on average strength draught beer sold in pubs across the UK will be frozen, helping the hospitality sector including pubs and restaurants.
“They showed what’s possible when entrepreneurs, government and local communities come together. So today I announce that we will deliver 12 new Investment Zones, 12 potential Canary Wharfs.”
- Create 12 Canary Wharfs as investment zones across the UK, aiming to galvanise innovation.
- £8.8 for a second round of the City Region Sustainable Transport Settlements to unlock growth and help regions level up.
- £1 billion to the Levelling Up Fund has been confirmed, for local infrastructure projects across the country.
- Over £200 million for high quality local regeneration projects in areas of need. Regeneration is a signpost of future growth and demand, resulting in vast improvements to the local area, attract new residents and boost property prices.
- Over £400 million for new Levelling Up Partnerships for twenty areas in England most in need of levelling up. This includes Rochdale and Mansfield, with other areas expected to be published in due course.
- Business rates retention expanded to more areas in the next Parliament.
- Confirmed trailblazer devolution deals for the West Midlands and Greater Manchester Combined Authorities.