Good morning from Paul & Graham!

Budget Day today 12:30 - I’ll watch it on TV and quickly type up the main points here. A reminder that we don't do politics here - just facts & figures of interest to investors.

My notes from the Chancellor’s speech

(not comprehensive, I’ve just noted the biggest points, hopefully accurately)

For investors the most important points by far are re pensions -

Tax-free allowance for what we can put into our pension pots goes up from £40k to £60k p.a.

Pensions Lifetime Allowance, which caps the size of pension schemes has been abolished altogether! (currently c.£1m. It was rumoured to be going up to £1.8m). This makes our SIPPs very much more attractive, and could be good for equity markets. The reason it’s been done is to stop incentivising more experienced workers to leave the labour market with early retirement (especially senior doctors). Although will the next Labour Govt reverse this change I wonder? Note that the maximum tax-free lump sum will remain at £268k.

Corporation Tax - 19% rate didn’t generate enough investment. So sticking with the increase to 25%, but introducing 100% capital allowances (for 3 years, then hopefully permanent) for IT, plant & machinery spending. Worth £9bn p.a. to businesses that invest. Most generous capital allowance of any European country (large country, he might have said?). Sounds good for shares in capital-intensive sectors.

Enhanced allowances for life sciences, and creative sectors (TV/film mentioned as largest in Europe & expanding)

Other points -

OBR says the UK will not now enter a technical recession this year (did he mean 22/23 fiscal year, or 2023 calendar year? Will have to check the OBR forecasts directly)

OBR forecasting inflation will fall from 10.7% (Q4 2022), to just 2.9% by end 2023.

Energy price cap of £2,500 (typical usage) will be extended for another 3 months for households, saving £160 extra.

Prepayments meters for utilities - prices will be reduced to match direct debits. Pause on enforced installations.

Pubs - alcohol freeze for draught beers, etc. “Our beer may be warm, but the duty is frozen” - very droll!

Fuel duty again frozen, including continuation of 5p previous cut.

Combined, these measures knock 0.75% off inflation.

Govt debt - 92.4% of GDP next year. Then goes up a bit,…

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