Chancellor of the Exchequer Jeremy Hunt said growth for the UK is forecast at 0.8% in 2024, compared with the Office for Budget Responsibility’s previous estimate of 0.7%.

The Conservatives are seeking to close a 20 percentage-point polling gap versus the opposition Labour Party.

(March 6): Jeremy Hunt said UK growth is due to be stronger than previously forecast by the budget watchdog, a boost for the ruling Conservative Party ahead of an election expected later this year.

Delivering his annual budget, the Chancellor of the Exchequer said growth is forecast at 0.8% in 2024, compared with the Office for Budget Responsibility’s previous estimate of 0.7%. The watchdog is now predicting 1.9% growth for 2025, compared to a previous reading of 1.4%, and 2% growth in 2026, equal to the prior prediction of 2%, Hunt said.

“We are delivering the prime minister’s economic priorities,” Hunt said in the House of Commons on Wednesday. “We can now help families not just with temporary cost of living support but with permanent cuts in taxation.”

In February, a YouGov poll found 55% of Britons wanted the government to increase spending on public services if funds were available, compared to 30% who preferred tax cuts.

The rosier growth forecast is a welcome lift for Hunt and the Tories as they seek to close a 20 percentage-point polling gap versus the opposition Labour Party. Hunt is set to announce personal tax cuts in his budget in a bid for a pre-election boost, including a two percentage point reduction in national insurance, a payroll tax.

Hunt has been under pressure from Tory lawmakers to deliver eye-catching tax cuts even as he’s constrained by fragile public finances. The UK entered recession last year and the chancellor went into his budget with just £13 billion (RM77.85 billion) of breathing space against his key fiscal rule, a margin near historic lows.

The budget is one of the few remaining so-called political set-pieces the Conservatives have left to try to boost their poll standing ahead of the UK vote, which Prime Minister Rishi Sunak must call by Jan 25 at the latest.

Conservative strategists have said they want to fight the election on an improving economy and Britons getting past an historic squeeze on living standards. Tax cuts are a key part of the Tory messaging — even though the overall tax burden has risen to the highest level since World War II and polls show voters want repaired public services more than pre-election giveaways.

Still, senior Tories say a campaign built around tax cuts would create a clear dividing line with Labour and claw back votes from typical Tory voters who are considering either staying at home on polling day or backing a different party.

In February, a YouGov poll found 55% of Britons wanted the government to increase spending on public services if funds were available, compared to 30% who preferred tax cuts. Yet among 2019 Conservative voters, the picture was more mixed: 44% favoured more public spending, with 42% backing cutting tax.

That somewhat bolsters the case for tax cuts to shore up the party’s core vote, potentially helping avoid a landslide election defeat some pollsters predict.

There is another aspect to the strategy. If Hunt does change the non-domiciled tax status and extend the energy windfall tax, he’ll be taking two Labour policies that until now Sunak’s office had rejected. That is a gamble that the political embarrassment of taking an opposition party’s policy is more than offset by the problems it poses for Labour in finding new ways to fund its plans.

“We will inherit, we’re very clear if we win the election, it will be the worst fiscal inheritance since the second world war,” Labour’s deputy finance spokesman, Darren Jones, told Bloomberg TV before Hunt’s announcement.

Ahead of the budget, ministers had been considering whether to cut income tax or national insurance. Sunak pledged to reduce income tax during the Conservative leadership contest in the summer of 2022, and some of his aides favoured making good on that promise at this year’s budget, believing it would be noticed and understood more by voters in election year.

But cutting income tax would be more expensive, at about £13.7 billion a year on average over the next three years for a two percentage-point cut compared with £9 billion to £10 billion for the same reduction in national insurance, depending on whether the self-employed are included or not.

When reports emerged that Hunt opted for the national insurance cut over a move on income tax, some prominent Tories complained that it wouldn’t be enough to reverse the party’s ailing fortunes. “It is really just sort of fiddling while Rome burns,” Conservative peer David Frost, a small-state Tory on the right of the party, told Sky News on Tuesday.