Chancellor has 'difficult tightrope to walk' ahead of budget

As the Government prepares to deliver its final Spring Budget before a 2024/25 general election, Cumbria-based accountancy firm Lamont Pridmore predicts a pared-down ‘Budget for growth’ – putting the Chancellor in a difficult position.

Wednesday 6 March 2024 will see the Government announcing its Spring Budget, against a backdrop of recession and higher-than-predicted inflation – and a legal requirement to call a general election before 17 December of this year.

A number of policies have been touted in the press already, including further cuts to National Insurance following a two-percentage point reduction in the 2023 autumn statement.

Other suggested cuts have been the reduction of VAT for tourism and hospitality businesses, and the abolition of non-domiciled tax status, which the firm is confident will be included in the Budget.

The mini-budget put forward by then prime minister Liz Truss and chancellor, Kwasi Kwarteng, ultimately led to their downfall and the appointment of Rishi Sunak.

Acknowledging the difficulties in being proactive before Wednesday’s budget, Graham Lamont, managing partner at Lamont Pridmore, emphasised the need for the Chancellor to “balance the books” and keep the national deficit under the control.

Graham Lamont (Image: Supplied)“It is a difficult tightrope to walk between giving tax cuts ahead of an election,” he said, “and appearing to keep things balanced, minimise the deficit and repaying debt.

“It seems likely that it will be more of a ‘for everyone’ tax cut, rather than purely for businesses or individuals.

“We can see this in the speculation that there would be a two pence tax cut on Income Tax rates.

“It now looks far more likely that this will apply to National Insurance instead. This will still benefit huge swathes of the population, but it will ultimately cost the Treasury less – striking that critical balance.

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“Any cuts that do come about will need to be in line with the Government’s forecasted spending deficit. While the goal is likely to be to reduce the tax burden on businesses, entrepreneurs and employees, it is clear that the Chancellor will need to proceed with caution.

“We ultimately understand that this is an unnerving time for businesses and individuals as it’s hard to plan ahead of a Budget like this one.

“We’re always here for advice and support when legislation changes affect your financial planning.”