5 things marketers need to know from the UK’s ‘Back to Work’ budget
Today the UK chancellor Jeremy Hunt unveiled his Spring Budget, which he’s referring to as the ‘Back to Work’ budget. Here’s a quick catch-up on everything that relates to the ad industry.
Free childcare for 30 weeks for under twos announced in Spring budget / Pexels
UK inflation is forecasted to fall to 2.9% by the end of 2023. There is a more optimistic economic outlook for the year ahead as the Office for Budget Responsibility (OBR) cut its inflation forecast from 7.3% to 2.9%. Inflation is currently at 10.1% but it should be closer to 2%. The economy expanded in January after a sharp fall in December.
The UK economy is expected to contract by 0.2% this year but avoid recession and is forecasted to grow by 1.8% in 2024. “After this year, the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027,” Hunt said.
With that context out of the way, here's the important announcements.
The chancellor has unveiled a £4bn investment in the UK childcare system in a bid to encourage parents to return to work and offices. Currently, working parents in the UK are eligible for 30 weeks of free childcare for three and four-year-olds, this has now been extended to one and two-year-olds.
The government will also increase funding by £288m between 2024 and 2025 for the existing three and four-year-old childcare program. This should go some way to help agencies still grappling with flexible working policies.
Motherhood charity, Pregnant and Screwed recently partnered with Saatchi & Saatchi to launch an integrated campaign to raise awareness of a crisis in childcare costs. The group took to Twitter today (March 15) to say it was “elated” to see the government’s childcare boost but warned: "from previous experience, we know that the treasury doesn’t give anything, without taking something. The devil is in the detail.”
AI research and development
The chancellor has announced an annual £1m prize for AI research for the next 10 years in a bid to make the UK a better place for AI investment. Hunt is calling this an “AI sandbox” and will award the fund “to the person or team that does the most ground-breaking AI research”.
Fuel and pint duty freezes extended
Fuel duty has been frozen for a year. Fuel tax was cut by 5p in the March budget but that was set to expire on March 31.
From August 1, the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets. “British ale may be warm but the duty on a pint is frozen,” Hunt said.
Corporation tax rise & small business investment
Tax paid by businesses is expected to rise from 19% to 25% in April. This means companies that make a profit of more than £250,000 will pay 25% tax on their profits from April.
SMEs the government has increased the Annual Investment Allowance to £1m, which means businesses can deduct the full value of their investment from the year’s taxable profits.
Leveling up agenda
The budget included 12 new out-of-London investment zones in England with £80m ringfenced for “generous tax incentives”.
They will be spread across the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool.
There will also be at least one in each of Scotland, Wales and Northern Ireland.