NIESR’s Response to the Spring Budget - 15 March 2023

• The decision to go ahead with the rise in corporation tax from 19 per cent to 25 per cent will dampen GDP and hurt the supply side of the economy in the long run, though this is mitigated to a degree by the range of measures the government has announced to support business investment. [...] (5) NIESR Response to the Spring Budget Fiscal Space “The Chancellor announced that he would meet his fiscal targets for 2027-28 by £6.5 billion in the case of the debt target and £39.2 billion in the case of the deficit target. [...] Figure 2: CPI inflation forecasts (7) NIESR Response to the Spring Budget Tax Changes “The decision to go ahead with the rise in corporation tax from 19 per cent to 25 per cent will dampen GDP and hurt the supply side of the economy in the long run. [...] The range of measures the government has announced to support business investment will help mitigate this, but it remains to be seen as to whether this will be enough, especially as the time horizon for these measures may not be long enough to provide long term certainty.” - Ed Cornforth (Associate Economist) • We simulated the effects of the rise in the corporation tax rate from 19 to 25 per cent. [...] A Variable Price Cap would raise the cost of energy with its usage for all other households, which would lower the bills for the lower-income households who tend to use the least amount of energy and raise it for the higher-income households who tend to use the most.