London Daily

Focus on the big picture.
Thursday, Sep 11, 2025

UK Budget: Hunt tries to jolt economy with childcare, pension reforms

UK Budget: Hunt tries to jolt economy with childcare, pension reforms

Finance minister Jeremy Hunt sought on Wednesday to revitalise Britain's stagnating economy with a mix of childcare and pension reforms to tempt people back to work, as well as corporate tax breaks to boost weak business investment.

Saying the world's sixth-biggest economy was now set to avoid a recession this year - even if it will still contract - Hunt extended help for households hit hard by soaring energy bills and froze a tax on vehicle fuel.

"In the face of enormous challenges, I report today on a British economy which is proving the doubters wrong," Hunt said, to jeers from the opposition Labour Party which is riding high in opinion polls ahead of an election expected next year.

"In the autumn we took difficult decisions to deliver stability and sound money," said Hunt, who was rushed into the Treasury last October to undo the plans for tax cuts that sowed chaos in financial markets during Liz Truss's brief premiership.

"The International Monetary Fund says our approach means the UK economy is on the right track."

Labour leader Keir Starmer accused Hunt of "dressing up stagnation as stability" and said Britain "is on a path of managed decline."

After the shocks of Brexit, a heavy COVID-19 hit and double-digit inflation, Britain's is the only Group of Seven economy yet to recover its pre-pandemic size, having previously suffered a decade of near-stagnant income growth.

Hunt and Prime Minister Rishi Sunak resisted calls from some lawmakers in their Conservative Party for big tax cuts now to ease the heaviest tax burden on the economy since World War Two.

But they found money to extend household energy subsidies by three months and freeze fuel duty for another year.

Despite that help, and lower inflation than previously expected, living standards remain on track for a record fall over the two years to the end of March 2024.

In a bid to speed up growth, Hunt expanded free childcare to children under two in England as a way to get more parents of young children into work. Campaigners said the 4 billion pounds ($4.8 billion) of annual funding would not meet demand.

Other measures to boost the size of the workforce included the end of penalties for people breaking thresholds on pension contributions, an attempt to keep more older people in their jobs, and welfare changes to encourage disabled people to work.

Independent forecasters at the Office for Budget Responsibility (OBR) said it was hard to judge the impact of Hunt's attempts to get more workers into the jobs market and it warned that the share of people in work or looking for it was set to hit a 23-year low next year before rising.

Hunt also announced a new three-year incentive for business investment that will allow companies to offset 100% of their capital expenditure against profits, although that represented a scaling-back of tax breaks under a previous scheme.

The OBR said the change would not cushion all the pain for companies, as a leap in the corporation tax rate next month will represent the heaviest burden on businesses since the levy was introduced in 1965.

Paul Johnson, director of the non-partisan Institute for Fiscal Studies, said the incentives would cause more volatility for businesses.

"Today's announcement is just the latest in a long line of changes and temporary tweaks," Johnson said. "There's no stability, no certainty, and no sense of a wider plan."

Other budget measures included more investment in nuclear power and a new training programme for workers aged over 50.

Hunt said the government would add 11 billion pounds to the defence budget - which has been stretched by Britain's support for Ukraine in its war with Russia - over the next five years.


RECESSION AVOIDED, JUST


A new set of economic forecasts showed gross domestic product was set to shrink by 0.2% in 2023 rather than contract by 1.4% as projected by the OBR in November.


Since then, energy costs - which soared after Russia's invasion of Ukraine - have come down and there have been signs of a recovery in some economic data.

"Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year," Hunt said.

The OBR forecast economic output would grow by 1.8% in 2024 and by 2.5% in 2025, he said, compared with its previous forecasts for growth of 1.3% and 2.6% respectively.

It cut its forecast for inflation this year to 6.1% from 7.4% in November - and said it would remain under 1% for the following three years.

Many economists have said Hunt probably wants to hold back some fiscal firepower for closer to the next national election.

But Wednesday's forecasts showed the limits going forward.

Hunt's target to get Britain's public debt - currently standing at about 2.5 trillion pounds - falling as a share of GDP in five years' time was on course to be met with a buffer of just 6.5 billion pounds.

The OBR said that was the narrowest margin for any finance minister since George Osborne set up the fiscal watchdog in 2010.


($1 = 0.8304 pounds)

Newsletter

Related Articles

0:00
0:00
Close
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
Pig Heads Left Outside Multiple Paris Mosques in Outrage-Inducing Acts
Nvidia’s ‘Wow’ Factor Is Fading. The AI chip giant used to beat Wall Street expectations for earnings by a substantial margin. That trajectory is coming down to earth.
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
On the Anniversary of Queen Elizabeth’s Death: Prince Harry Returns to Britain
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Murdoch Family Finalises $3.3 Billion Succession Pact, Ensuring Eldest Son’s Leadership
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Court Staff Cover Up Banksy Image of Judge Beating a Protester
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
Elon Musk Poised to Become First Trillionaire Under Ambitious Tesla Pay Plan
France, at an Impasse, Heads Toward Another Government Collapse
Burning the Minister’s House Helped Protesters to Win Justice: Prabowo Fires Finance Minister in Wake of Indonesia Protests
Brazil Braces for Fallout from Bolsonaro Trial by corrupted judge
The Country That Got Too Rich? Public Spending Dominates Norway Election
Nearly 40 Years Later: Nike Changes the Legendary Slogan Just Do It
Generations Born After 1939 Unlikely to Reach Age One Hundred, New Study Finds
End to a four-year manhunt in New Zealand: the father who abducted his children to the forests was killed, the three siblings were found
Germany Suspends Debt Rules, Funnels €500 Billion Toward Military and Proxy War Strategy
EU Prepares for War
BMW Eyes Growth in China with New All‑Electric Neue Klasse Lineup
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
US Justice Department Launches Criminal Mortgage-Fraud Probe into Federal Reserve Governor Lisa Cook
Escalating Drug Trafficking and Violence in Latin America: A Growing Crisis
US and Taiwanese Defence Officials Held Secret Talks in Alaska
Report: Secret SEAL Team 6 Mission in North Korea Ordered by Trump in 2019 Ended in Failure
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Florida Murder Case: The Adelson Family, the Killing of Dan Markel, and the Trial of Donna Adelson
×