Inflation is set to fall below the 2% target a year earlier than forecast, the Chancellor has announced during his 2024 Spring Budget speech.
Responding to the budget Karen Betts, CEO of the Food and Drink Federation (FDF), said: “It’s great to see the Chancellor’s acknowledgement of the impact of inflation on households with his cut to National Insurance. In parallel, the food and drink manufacturing sector continues to keep prices as low as possible, conscious that many families’ budgets are now close to breaking point.
“But the costs of recent turbulence to our sector are real, and are illustrated in stark terms by a steep fall in investment in food and drink manufacturing, which declined by a third last year compared to 2019. Our country needs a strong food and drink sector – which underpins our food security, as well as hundreds of thousands of jobs and forward-looking science and innovation.”
Betts continued: “For this we need joined-up, constructive Government policies to shore up our strength and to create the conditions for investment. This was in short supply in this Budget. Instead, our sector is still held back by a muddle of poor regulation – the latest example of which is ‘Not for EU’ labelling, which will have a chilling effect on investment and exports while tying UK food labelling once again to EU rules.”
NFU says Chancellor “missed an opportunity” to deliver for producers
National Farmers’ Union (NFU) president Tom Bradshaw said: “Where some of the headline announcements, such as an extension to agricultural property relief (APR) and a reduction of National Insurance for the self-employed, could offer some benefits to agricultural businesses, the Chancellor has missed an opportunity to deliver resilience for food producers.
“We welcome the Government backing the NFU’s call for the extension of APR to land in Environmental Land Management (ELM) schemes as it will remove a barrier of entry for a number of farm businesses and give farmers more choice about how to use their land. But the extension of this beyond ELMs may have an adverse impact on food production and farm tenancies and we will work with Treasury to assess those implications.”
Bradshaw added: “Agricultural businesses are facing a challenging economic backdrop, with input costs at persistently high levels and at least a 50% reduction in direct farm payment support due this year.”
In his Statement, Chancellor Jeremy Hunt reported that:
- The national insurance contribution rate will be reduced by 2% as of April
- The Office for Budget Responsibility (OBR) expects inflation to fall below the 2% target in the coming months
- The higher rate of property capital gains tax will be reduced from 28% to 24%
- OBR predicts that underlying debt will fall as a share of the economy to 92.9% in 2028/29.
On page 12 of the ‘Red Book’, that accompanies the budget it was stated: “Inflation has fallen but – at 4% in January – it remains double the 2% target. The OBR forecasts inflation to fall to 2% in Q2 2024, around a year earlier than forecast in November 2023.”
The Chancellor confirmed that: “Inflation is expected to fall below target and then gradually increase to settle at 2% in 2028. Measures at Spring Budget… reduce inflation by 0.2% in 2024-25.”
