Jeremy Hunt targets business in ‘Budget for growth’

Today’s top stories

• BlackRock chief Larry Fink raised the spectre of a “slow rolling crisis” after the failure of Silicon Valley Bank. Here’s our SVB coverage in full.

• Credit Suisse shares plunged more than 20 per cent to an all-time low after its biggest shareholder said it would not provide the bank with any more capital, reigniting the sell-off in bank stocks triggered by the SVB collapse.

• Consumer spending in China rebounded in the first two months of 2023, according to the first detailed overview of activity since Beijing ended its strict pandemic restrictions. Falling export demand and the lingering property sector downturn could still dent the momentum for recovery.

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Good evening.

If you’re rich, have a child under three, have a company that does a lot of R&D, and like going to the pub: congratulations — you’re a big winner from today’s UK Budget.

Chancellor Jeremy Hunt claimed his “Budget for growth” made Britain the best place to invest of any advanced economy as he announced £9bn in tax breaks for business alongside a range of measures to keep people in work, including the expansion of free childcare and a surprise decision to scrap the £1mn lifetime cap on tax-free pension contributions.

Hunt’s statement was as much about demonstrating stability after the catastrophic “mini” Budget of his predecessor Kwasi Kwarteng last September.

The chancellor was able to brandish new analysis from the Office for Budget Responsibility which said the UK would avoid a technical recession this year. The economy is now set to shrink just 0.2 per cent, helped by falling gas prices, before recovering to an annual growth rate of 1.9 per cent by 2027.

The UK’s overall performance, as economics editor Chris Giles notes, is still extremely sluggish: before the 2007-08 global financial crisis, it had been growing on average by about 2.75 per cent a year. As our Big Read explains, the fallout from the crisis was followed by further blows from austerity, the pandemic, and Brexit.

The OBR also confirmed that the UK tax burden would reach the highest level since the second world war in 2027-28 while the ratio of public spending to GDP would settle at 43.4 per cent, its highest sustained level since the 1970s, highlighting the still fragile state of the government finances.

Aside from extending free childcare to one- and two-year-olds and the improvements on pension allowances, other plans to tackle labour market inactivity included incentives for the sick, disabled and over-50s to go back to work or increase their hours. Hunt will be cheered by new data yesterday showing inactivity falling and wage growth slowing.

While significant personal tax cuts will probably be saved until the autumn, there were a handful of measures to help struggling households. The energy support scheme will be extended until June, capping typical bills at £2,500; last year’s fuel duty cut will be kept and the rate frozen; and there will be an 11p per pint cut in duty on draught beer in pubs.

There were also incentives for carbon capture and storage as part of the green transition, while the nuclear sector would be classed as “environmentally sustainable” so it could receive the same incentives as renewable energy.

While Hunt said the improved outlook for the economy was evidence that “the declinists are wrong and the optimists are right,” Labour leader Sir Keir Starmer argued in response that the statement was merely stagnation dressed up as stability and “a huge giveaway to some of the wealthiest people in the country”.

Working people were entitled after 13 years of Conservative rule to ask themselves if they were better off than when the party came to office, he said. “The resounding answer is no — and they know it,” he said.

Key links

Need to know: UK and Europe economy

UK prime minister Rishi Sunak was warned not to relax City of London rules after the collapse of Silicon Valley Bank sparked calls for a rethink of planned regulatory overhauls.

The US banking crisis could also deter the European Central Bank from committing to future interest rate rises. The ECB has already said it intends to raise borrowing costs by half a percentage point when its governing council meets tomorrow.

Brussels warned Germany that a cap on electricity costs for industry would harm Europe’s single market. Splits have also opened among EU policymakers over including nuclear power in new funding rules aimed at boosting green industries. German energy giant Eon warned of another year of crisis for the sector.

The EU is considering how to mirror US moves to stop companies circumventing export bans on sensitive technology by manufacturing it elsewhere.

Need to know: Global economy

US consumer prices rose 6 per cent year on year in February, complicating the way forward for the US Federal Reserve and its programme of interest rate rises, and a slight fall from January’s 6.4 per cent. “Core” CPI inched up a more than expected 0.5 per cent from 0.4 per cent. Separate data today showed producer prices fell more than expected. The FT editorial board hit out at the Republicans’ game of chicken on the US debt.

The US is set to become the world’s largest exporter of liquefied natural gas after developer Venture Global announced a big expansion on a Gulf Coast site to make it among the biggest LNG export plants in the world.

Lebanon’s banks began a strike over “arbitrary” judicial decisions which they said had drained their already dwindling foreign reserves. The Lebanese pound has plummeted more than 98 per cent against the US dollar since the country went into economic meltdown in 2019.

Argentina’s annual inflation rate passed 100 per cent for the first time since 1991 and is now among the highest in the world. The new data comes at a difficult time for the government of President Alberto Fernández, which had hoped to ease financial pressure on voters ahead of an election in October.

Bolivians meanwhile are queueing for dollars as a crisis of confidence spreads, amid concerns that its economic model of the past two decades, fuelled by exports of natural gas to its neighbours, is now bust. Rating agency Fitch yesterday downgraded the country’s debt deeper into junk territory.

Need to know: business

ChatGPT maker OpenAI unveiled its new model GPT-4, which has “human-level performance” and can be accessed via the $20 paid version of ChatGPT. PwC said it was introducing a GPT chatbot named Harvey to speed up the work of its 4,000 lawyers.

Pfizer offered to change its Covid-19 vaccine contract with the EU after member states complained of a glut of shots but some countries are angry at its insistence on payments for doses ordered that will never be delivered.

Meta is cutting another 10,000 jobs, its second tranche in just four months, as part of its “year of efficiency”.

Swedish start-up Northvolt is helping Europe compete with the US and Asia in a sector crucial to the green transition. Our Big Read explains how. UK battery start-up Britishvolt owed up to £160mn when it collapsed in January.

Join FT journalists and guests for a subscriber-only webinar on the collapse of Silicon Valley Bank and the fallout for the banking sector and tech innovation this Thursday March 16, 4-5pm GMT (12-1pm ET). Register for your free subscriber pass and put your questions to our panel

The World of Work

Many organisations are now offering employees in-house therapy at a time when public healthcare systems are stretched. Trained therapists can help managers identify problems in the workforce when hybrid or remote working can make mental health issues harder to spot.

Online business education programmes are still proving popular despite a drop in demand for campus-based MBAs. But what’s the best way to pick and apply for a course? Find out and discover more in our new special report: Online learning.

Some good news

Some potentially great news for the more than 8mn people in the US using insulin drugs. Novo Nordisk has followed Eli Lilly in slashing prices for some of its products by 75 per cent.