Chancellor Rishi Sunak has warned inflationary pressures will continue to buffet the UK economy, with the Office for Budget Responsibility (OBR) forecasting inflation will average 4% next year.

Sunak said inflation could be explained by two global forces: with demand for goods increasing more quickly than supply chains can meet; and global demand for energy surging at a time when supplies have already been disrupted, putting strain on prices.

In order to help address the driver shortage, Sunak annouced new funding to improve lorry park facilities. The Government also announced an extension of the HGV levy by an additional year to August 2023, as well as freezing Vehicle Excise Duty for heavy goods vehicles.

More broadly, the OBR forecast that the economy will grow by 6.5% this year, with the Chancellor saying it will take until the start of 2022 for the economy to return to its pre-pandemic size. This is an improvement on the 4% rise forecast by the OBR in March 2021.

Unemployment is forecast to peak at 5.2%, down from a forecast for about 12% forecast last year.

The National Living Wage has been confirmed that it will rise next April by 6.6%, to £9.50 an hour.

An increase in fuel duty will be cancelled aimed the highest fuel prices in eight years, saving motorists £8bn over five years. 

As well as the one-year discount on business rates, a consultation on an online sales tax was announced. However there was no mention of a reduction, or freeze, on VAT. VAT is currently due to increase back up to 20% in April 2022.

 

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