The Chancellor of the Exchequer of the United Kingdom, Jeremy Hunt, announced on Wednesday new tax relief measures for both companies and workers after a year that saw inflation shrink. A key element of the plan is a fall in national insurance contributions from about 12% to 10%. The move could save a typical worker about 450 pounds annually, based on an average salary of 35,000 pounds. Hunt emphasized in his autumn address to Parliament that recognizing the hard work of people helps lift the whole economy and benefits everyone.
Last year, the British government highlighted economic stewardship as a factor in taming inflation and setting the stage for growth. The Office for Budget Responsibility has since adjusted its near-term forecasts, with growth projections for the next two years cooling. In March, growth expectations were raised to 2.5% for 2024, then projected to slow to 1.4% in 2025, while 2024 was adjusted to 0.7%. The forecast for this year had shown a small path toward growth after an anticipated recession in the near term.
minimum wage
Despite a tougher economic outlook, the Finance Minister reaffirmed plans to lift the minimum wage by around 10% for workers over 21, with an hourly ceiling near 11.44 pounds. On a standard month of 170 working hours, a worker will see earnings meet or exceed a baseline of 100 hours’ pay. In monthly terms, this equates to roughly 1,944 pounds, or about 2,231 euros. The government also confirmed an 8.5% rise in pensions, aligning with ongoing wage growth observed between May and July, and ending speculation that the commitment might be scaled back.
The administration signaled further tax reliefs for businesses, including broader cuts in machinery and equipment investment and continued reductions in business rates for small firms in the leisure and hospitality sectors. In addition, the government proposed freezing taxes on alcoholic beverages for pubs through next August, covering beer, cider, and wine as part of a broader support package for the sector.
social benefits
The finance ministry announced a 6.7% increase in Universal Credit, a key form of social assistance for low-income households. This uplift is designed to align with living costs without pushing up inflation and would deliver an average boost of around 470 pounds for about 5.5 million households next year. A central objective remains to re-engage inactive workers with the labor market, aiming to bring roughly 200,000 people back into employment in the near term. The plan involves targeted investments and reforms to access to aid and subsidies to ensure these gains are sustainable.
Officials noted that every year more than 100,000 people claim sickness or disability benefits without actively seeking work. The plan includes channeling resources toward programs that recognize talent and reduce wasted potential. An estimated 3 billion euros will be devoted to support for people with physical or mental health challenges, as well as long-term unemployed individuals, to help them re-enter the workforce as quickly as possible. If job seekers cannot secure employment after 18 months, a program will require participation in an internship to build skills. Refusal to participate would result in the loss of benefit rights.
Overall, the measures reflect a concerted effort to balance fiscal responsibility with social protection, aiming to sustain growth while improving the livelihoods of workers and families across the country. The government stresses that these policies are designed to be practical, affordable, and responsive to changing economic conditions, with ongoing monitoring by the Treasury and related bodies to ensure their effectiveness and equity. These steps are intended to support enterprise investment, workers’ earnings, and the wellbeing of households as the economy adjusts to new global and domestic realities. [citation: HM Treasury, 2024].