The net giveaway of £13.9bn (0.5% of GDP) in 2024/25 in the Budget may help end the recession before an election later this year. But fiscal policy is still being tightened in 2024/25 and that tightening will continue after the election and will probably require new tax hikes. The resulting drag on the economy may contribute to more interest rate cuts next year than most expect, from 5.25% now to 3.00%.
Note: We will be discussing whether the next government will move the dial on the economy in a 20-minute online briefing at 3pm GMT on Wednesday 13th March. (Register here.)
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