The Chancellor is preparing for a £40bn boost to the Treasury from higher tax receipts as industry and campaign groups call for more solutions to tackle the cost of living.
Rishi Sunak is expected to reveal better borrowing figures than previously forecast, alongside higher tax revenues and a slimmer debt-to-GDP ratio in 2021-22. The figures are anticipated to be better than estimates given by the Office for Budget Responsibility (OBR) in October.
However, the war in Ukraine has clouded prospects for the year ahead, while families are also eager to see Sunak announce fresh measures to tackle a looming cost of living crisis.
“The good news is that the Chancellor’s starting fiscal position is around £40bn above orginial expectations,” Barret Kupelian, senior economist at PWC told The Times.
Conflict in Ukraine has forced the OBR to cut its GDP forecast for 2022 from an anticipated six per cent closer to three to four per cent.
The Chancellor has said his goal with the upcoming spring statement is to “keep cutting taxes and get the tax burden down.”
The Treasury plans to hike National Insurance contributions from next month, which will raise £13bn to address the NHS backlog.
However, campaigners have said this increase comes at the worst possible time, with energy bills also set to soar 54 per cent in April.
There have been calls for Sunak to increase a previously-announced £200 discount on household energy bills, as well as to slash fuel duty.
Industry groups have also called for a VAT freeze, as hospitality and leisure bosses prepare for the tax to return to its pre-pandemic 20 per cent rate from 12.5 per cent.