Did the budget do enough to reduce borrowing costs? Industry reacts

Inflation to more than halve

In this, chancellor Jeremy Hunt – amongst other things – outlined forecasts from the Office of Budget Responsibility, which suggests inflation will drop from 10.7% at the start of this year to 2.9% at the end of 2023.  
In response to this announcement, Hargreaves Lansdown’s head of money and markets Susannah Streeter said: “Jeremy Hunt brandished the forecast from the Office for Budget Responsibility that the UK will swerve a recession this year.  

“Things were already looking up, with consumer and business confidence rising, and spending proving much more resilient. The rebound in the huge services sector in February had already raised hopes, and now more pieces of the jigsaw are now in place, a rosier picture is emerging.  

“But given that the cost-of-living crisis is still proving painful, economic activity is still likely to be slow to power up and a period of stagflation, not super-charged growth, is still expected.” 

Money Advice Trust chief executive Joanna Elson, meanwhile, said while the hope of inflation falling significantly this year will come as a relief to those struggling – for many households the damage is already done. 

“The hope of inflation falling so significantly this year will come as a relief to those struggling – but for many households the damage is already done.  Millions who are already behind on their energy and other bills are going to need further support to get through this cost-of-living crisis. 

“The government should consider dedicated funding to write off energy debts for people facing unaffordable repayments, and payment matching to help people pay off their debts more quickly – to help the millions worrying about what the months ahead will bring.” 

Budget "likely tacking very similar challenges" to those faced in November
In terms of policies, Hunt put special emphasis on getting people back to work, welfare reforms and changes to corporation taxes.  

Paul Heywood, chief data and analytics officer at Equifax UK, believes that while Chancellor’s budget looks like it’ll return the nation to business as usual after the Autumn budget, many are “likely tackling very similar challenges” to those they faced last November.  

He added: “Businesses certainly will welcome plans to restore tax relief for those reinvesting into research and development; however, there is little in the Chancellor’s plan to tackle high borrowing costs for consumers and businesses.  

“Attention will quickly shift to the Bank of England’s base rate decision next week, though there seems little chance of an easing of climbing borrowing costs, as the Bank continues to tackle inflation. 

“Regardless of next week’s rate decision, the credit sector will continue to ensure borrowers can access the credit products they need and support any consumers who find themselves vulnerable in the current economic situation.” 

Energy Price Guarantee

Ahead of the budget, the government confirmed the Energy Price Guarantee would remain at its current level and ended the extra charge placed on those on pre-payment meters. For Richard Lane – StepChange’s director of external affairs – this will make a real difference to struggling households.  

He added: “But for millions of people, the financial squeeze is rapidly becoming a debt crisis.  

“Currently, one in three people who comes to StepChange for help does not have enough money each month to cover their bills and essentials. They are at breaking point due to soaring utility bills, rising food costs, unaffordable rents or mortgages, and stagnant wages.  

“Alongside the welcome extension of help announced, the government should act to introduce social tariffs for utilities, end punitive deductions from benefits to repay debts, make the Household Support Fund permanent and ensure that rising council tax does not leave more vulnerable households seeing a bailiff on their doorstep.” 

Similarly, Sopra Steria managing director of private sector Craig Wilson believes that, while several measures announced will be welcome relief for households in the UK, as inflation remains high many will find themselves struggling to keep up with the rising cost of living.  

He explained: “Despite over a quarter of adults across Great Britain already experiencing some form of financial vulnerability, the majority either aren’t aware of the types of support available, or simply don’t have the confidence to ask for help.  

“And with almost a fifth (19%) of UK consumers not confident they’re able to pay their bills in their current financial position, more needs to be done to ensure consumers can access support when experiencing financial difficulty.  

“Whilst the announcement of the support extension for those struggling with energy bills is welcomed, it’s important we recognise the ongoing need to help those in vulnerable situations. Utility companies, financial service providers, and the government all have a significant part to play in raising awareness of the services on offer and removing the stigma around asking for help.  

“This will be vital to supporting those already experiencing, or at risk of, financial vulnerability over the coming months.”