Spring statement 2022: RECAP as Rishi Sunak cuts fuel duty and VAT on energy saving devices
But he acknowledged the impact of inflation, which is at a 30-year high, and the global economic uncertainty caused by Vladimir Putin’s invasion of Ukraine.
The Office for Budget Responsibility (OBR) downgraded growth in gross domestic product – a measure of the size of the economy – from the 6% forecast for this year at the time of the Budget in October to just 3.8%.
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Hide AdMr Sunak said “it is too early to know the full impact of the Ukraine war on the UK economy” but the OBR acknowledged there was “unusually high uncertainty” around the economic outlook.
The cost-of-living crisis driven by rising fuel and energy prices was set to be exacerbated in April by the 1.25 percentage point hike in national insurance to fund the NHS and social care.
But Mr Sunak unveiled a £6 billion plan to increase the threshold at which people start paying national insurance contributions (NICs) by £3,000 to £12,570 from July.
Mr Sunak said it was “a £6 billion personal tax cut for 30 million people across the United Kingdom, a tax cut for employees worth over £330 a year”.
Mr Sunak said around 70% of workers would have their tax cut by more than the increase coming in April.
And he promised further support in 2024 with a pledge to cut the basic rate of income tax from 20p in the pound to 19 – “a £5 billion tax cut for over 30 million people”.
Rising energy, goods and food prices helped push inflation to increase 6.2% in the 12 months to February, Office for National Statistics (ONS) figures revealed on Wednesday morning, hours before Mr Sunak’s speech to the Commons.
You can follow live updates from the Spring Statement in our live blog.
Spring statement 2022: Live updates on UK Spring Statement from Rishi Sunak
A 5p per litre cut in fuel duty has been announced by Chancellor Rishi Sunak.
The reduction will be implemented at 6pm on Wednesday and will last until March 2023.
Asda was the first major retailer to confirm it will cut prices, with a 6p per litre reduction in petrol and diesel.
Motorists have been hit by record pump prices since Russia’s invasion of Ukraine led to an increase in the cost of oil due to supply fears.
Retailers were also accused of failing to pass on a reduction in wholesale costs earlier this month.
Figures from data firm Experian Catalist show the average cost of a litre of petrol at UK forecourts on Tuesday was 167.3p, while diesel was 179.7p.
This is an increase of 18.0p per litre for petrol and 27.0p for diesel over the past month.
Hello and welcome to one of the big Westminster calendar events of the year - the Spring Statement.
Rishi Sunak will give his economic update from about 12:30 GMT.
Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street as he heads to the House of Commons, London, to deliver his Spring Statement.
Ahead of the Spring Statement, Iceland’s managing director Richard Walker said the pressure of trying to keep supermarket prices down is “relentless” as he called for action on fuel prices.
“It’s incredibly concerning. We’re hearing of some food bank users declining potatoes and root veg because they can’t afford the energy to boil them,” he told BBC Radio 4’s Today programme.
Mr Sunak is expected to link strengthening the UK economy to opposing Russian President Vladimir Putin’s invasion of Ukraine, but he is under pressure to address the domestic crisis.
“So when I talk about security, yes, I mean responding to the war in Ukraine,” he is poised to tell the House of Commons.
“But I also mean the security of a faster-growing economy, the security of more resilient public finances, and security for working families as we help with the cost of living.”
The Financial Times reported on Tuesday evening that forecasts in the statement will show the deficit is better than expected this year, to the tune of £20 billion.
However, the newspaper said Mr Sunak is planning to set aside a large part of this windfall cash – rather than investing the full sum in driving down the cost of living.
Pump prices hit new record highs ahead of Chancellor Rishi Sunak’s potential announcement of a fuel duty cut in his spring statement.
Figures from data firm Experian Catalist show the average cost of a litre of petrol at UK forecourts on Tuesday was 167.3p, while diesel was 179.7p.
This is an increase of 18.0p per litre for petrol and 27.0p for diesel over the past month.
Oil prices surged immediately after Russia’s invasion of Ukraine.
This led to an initial increase in wholesale costs for fuel retailers, although prices dropped last week.
Fuel duty is currently levied at 57.95p per litre for petrol and diesel, with VAT at 20% charged on top of the total price.