Spring statement 2022: key points at a glance | Spring statement 2022

Sunak’s opening remarks

Rishi Sunak opens by highlighting the war in Ukraine and says Britain’s economic strength underpins freedom and liberty. The chancellor says he will respond to the conflict by building a stronger, more secure economy for the UK.

“The actions we have taken to sanction Putin’s regime are not cost free for us at home. The invasion of Ukraine presents a risk to our recovery as it does to countries around the world,” he says.

Jessica Elgot, chief political correspondent: The invasion of Ukraine certainly puts an additional burden on the UK economy but consumers were already facing significant pressures from inflation and energy prices, as well as Sunak’s tax rise. Using the war in Ukraine to set the tone for the statement looks like the beginning of a strategy to at least partly attribute the pain of the cost of living to the crisis as a way of swerving political blame for the growth slowdown which was predicted well before Russia invaded.

Growth

• The chancellor says forecasts from the Office for Budget Responsibility show the economy will grow by 3.8% this year.

• GDP will grow by 1.8% next year, 2.1% in 2024, 1.8% in 2025, and 1.7% in 2026.

• In October, the OBR had forecast growth of 6% f0r 2022 as the UK economy recovers from the Covid pandemic.

• The economy grew by 7.5% in 2021, after a fall of 9.4% in 2020 – the biggest decline for a century – during the first wave of the pandemic.

Jessica Elgot, chief political correspondent: Sunak uses these figures as a way to emphasise the difficult choices made in the rest of the statement. Again, he links them directly to the Ukraine crisis, saying choices to sanction Putin’s regime were not cost free.

Cost of living

• The chancellor says the OBR forecasts inflation will average 7.4% this year.

• Fuel duty will be cut for only the second time in 20 years, by 5p a litre for a full 12 months.

• Sunak says the fuel duty cut is worth £5bn and takes effect from 6pm on Wednesday.

• The government will cut a 5% VAT rate for households installing solar panels, heat pumps, insulation to zero.

• Sunak says he will double the government’s household support fund to £1bn.

Jessica Elgot, chief political correspondent: The cut to fuel duty was one of the only actions well trailed by Treasury sources ahead of the statement, after a concerted campaign by Conservative MPs and tabloid papers. But, in a nod to the divide still raging in the party, there is a net zero sweetener to the first fuel duty cut in years – a VAT cut to help households install energy efficiency measures.

Borrowing

• Sunak says borrowing in the current financial year, 2021-22, will be 5.4 of GDP and will fall to 3.9% next year.

• In its previous forecasts in October, the OBR had estimated borrowing would be 7.9% of GDP, or £183bn in cash terms, in 2022-23.

• The chancellor says debt service costs will rise to £83bn in the next fiscal year, the highest level on record.

• “We should be prepared for the economy and public finances to worsen potentially significantly,” Sunak says.