Times-No Income Tax Cut Alongside Expected NIC Reduction

Steven Swinford at The Times posts on X: "Budget latest: Most of today's Budget is already out there - the 2p NI cut is the centrepiece along with a series of revenue raisers. There are some claims that Jeremy Hunt will announce an additional 1p cut in income tax today on top of the NI cut. He won't. The big unanswered question is whether he will reduce the profile of future public spending rises from 1% to 0.75%, which would mean big cuts for unprotected departments. It looks difficult to make the figures add up without doing so but we'll know in a few hours"

• Comes after Politico reportedearlier today that "One Cabinet minister told Playbook they were now expecting the chancellor to not only cut NI by 2p, but to also cut income tax by 1p. Which would be quite something."
• The rebuttal of an income tax cut coming at the same time as a reduction in national insurance contributions would align with the view presented in MNI's budget preview, which comes in the form of the latest UK Issuance Deep Dive (see PDF below):

UK_Budget_Preview_2024_03.pdf

• While an income tax and NIC cut at the same time would likely be warmly welcomed by backbench Conservatives ahead of the election campaign, it could risk eating too much into the chancellor's 'fiscal headroom'. This could raise the spectre of fiscal profligacy that saw a sharp market reaction following the Truss-Kwarteng mini budget of 2022.