Reaction as UK sells £265bn of debt to fund budget

UK finance minister Jeremy Hunt delivered his budget speech on Wednesday, confirming a widely expected cut of 2 percentage points to National Insurance.

However, Hunt did not go further with a cut to income tax.

The UK finance minister also revealed that the UK’s non-domiciled tax regime will be abolished from April 2025.

Hunt said he would extend the windfall tax on the profits of oil and gas companies by one year. The 35% charge will now expire in 2029, instead of March 2028.

To help fund its latest budget, the UK government will sell £265 billion of debt in the fiscal year 2024-25 — which is more than the £258 billion expected by investors, Bloomberg reported.

The UK’s Debt Management Office (DMO) said it will sell £265.3 billion of gilts. Long-maturity bonds will make up 18.5% of the debt sale, compared to 21.1% last year.

If the DMO does sell more than £265 billion of gilts in 2024-25, it would be the second-heaviest year for UK debt sales  on record after the 2020-21 financial year when the UK was hit by the coronavirus pandemic.


Scottish Financial Enterprise CEO Sandy Begbie: “With a general election approaching, today’s Budget was an opportunity for the UK Government to boost business and public sentiment on the economic outlook and set out a path towards a lower tax, higher growth economy.

“The National Insurance reduction will be welcome news for families in Scotland, lowering cost pressures and providing a much-needed lift to consumer confidence.

“Measures to improve business investment, including the New Savings Bond and British ISA, will be viewed positively by retail and institutional investors and help savers benefit from the growth of UK companies.

“Businesses in Scotland and across the UK are looking for a level of certainly, continuity, and stability that has been lacking for too long in UK and Scottish politics.

“We would like to see a greater level of ambition and a clearer long-term economic plan for inclusive growth and a net zero economy, aimed at unlocking private investment and ultimately expanding the tax base to help us better fund vital public services.

“Scotland’s financial services industry has a key role to play here, and our sector growth strategy highlights our ambition to add between £4bn-£7bn to the Scottish economy over the next five years.

“Greater collaboration between the Scottish and UK Governments and a much clearer alignment in terms of tax, investment, and broader economic policy are core to us achieving these aims.”

Richard Stone, Chief Executive of the Association of Investment Companies (AIC): “We welcome the introduction of a UK ISA to encourage investment in the UK stock market. We’ve been calling for this as part of a broader initiative to reinvigorate the UK’s capital markets as well as promoting wider share ownership.

“All UK-listed shares, including investment companies, should be eligible for the UK ISA.

“We have more than 350 UK-listed investment companies, including more than a third of the FTSE 250.

“These companies provide access to diversified portfolios of equities, as well as hard-to-access assets like private companies, infrastructure and property.

“For any investor taking advantage of the new UK ISA, particularly those beginning their investment journey, investment companies can provide an excellent starting point.

“They have strong long-term performance, with the average investment company returning 158% over the last ten years.

“In addition, investment companies have boards of directors to look after shareholders’ interests and investors can attend AGMs, ask questions and vote, providing the ability to actively engage with their investments.”

Ryan Crighton, policy director at Aberdeen & Grampian Chamber of Commerce: “This is the fourth Tory tax raid on the North Sea in two years and heaps more uncertainty on a sector which needs stability to survive.

“Not only is Jeremy Hunt losing the support of industry, he is also losing the support of his North-east parliamentarians who understand that the windfall tax is bad for jobs, bad for investment, bad for energy security and bad for the energy transition.

“We need investment in new North Sea oil and gas fields to maintain jobs and offset declining production. Without that investment, production could halve by 2030, which places thousands – perhaps tens of thousands – of jobs at risk.

“We are already seeing investors walking away from deals – with some showing open dissent towards the UK – and if that gathers pace, then the 1,000 jobs we have already lost to the windfall tax could be a drop in the ocean compared to what is to come.

“The energy transition requires a very tricky balance to be struck.

“We need to manage what will be the final phase of exploration and production in the North Sea and at the same time also need to unlock over one trillion pounds investment to develop and build out the low carbon technologies of the future.

“The same workforce and supply chain are required to deliver both – but if we wind down oil and gas production before jobs are available at scale in renewable then we lose the world class expertise built up over 50 years and Aberdeen will pay the price.”

Scotch Whisky Association CEO Mark Kent: “The industry welcomes the Chancellor’s recognition of the benefits of continuing the duty freezes beyond August this year.

“That decision supports the Scotch Whisky industry, will incentivise investment and, as with previous cuts and freezes, boost Treasury revenue.

“With cost pressures hurting our bars and pubs, not to mention hard pressed consumers, the Treasury has provided some much-needed certainty and stability for the year ahead.

“Despite this freeze, Scotch Whisky is still put at a disadvantage by the duty system, based on a fundamental misunderstanding of how people consume alcohol and modern drinking trends.

“With today’s freeze cider is still taxed four times less than a spirit like Scotch Whisky and responsible consumers who enjoy a Scotch are paying too much tax compared with a beer or cider.

“Looking ahead, we will continue to work with the UK Government to ensure that our tax system is supporting the long-term success and prosperity of our iconic homegrown sectors such as Scotch Whisky, so that Scotch and other high-quality spirits are not put at a competitive disadvantage in the UK and other markets around the world.”

Chris Cummings, CEO of the Investment Association: “We strongly support the Government’s objectives to improve the quality of DC pensions and to boost the flow of capital to British businesses, whether publicly listed or privately owned. Both have a common theme: putting investment back at the heart of the agenda.

“Risk capital is the lifeblood of economic growth, and attracting a new wave of both domestic and international investors will help reinvigorate the UK investment environment and provide investment to innovative, high-growth companies.

“The investment management industry plays a pivotal role in this process, directing capital to businesses and projects that need it, and distributing the fruits of growth to millions of individual savers and investors. We therefore look forward to working with government to take forward its proposals and build on the Edinburgh and Mansion House reforms …

“The proposed UK ISA has great potential to drive new capital flows to UK companies, including small and mid-cap companies. As funds are the largest proportion of investments held by retail consumers in the UK, it is important that they are included within the new tax wrapper.

“We also encourage the Government to include the Long-Term Asset Fund (LTAF) to enable savers to invest in a broader range of assets, such as UK infrastructure projects. We are pleased that the Government plans to consult on the proposal to ensure its successful delivery.”

Fraser of Allander Institute: “As with recent fiscal events, you’d know almost all the content from the weekend’s headlines. Jeremy Hunt confirmed 2p off NICs for employees and self-employed main rates – down to 8p and 6p, respectively.

“Costs around £10bn a year – reduces taxes for median earner by £342 …

“But taxes are still going up in every year from 2024-25 onwards – just by less than in the November forecast and by less than pre-measures. All a bit Grand Old Duke of York, except having marched up the tax hill, JeremyHunt hasn’t quite made it all the way back down again.

“Eagle-eyed observers might spot tax/GDP is just below the record. We congratulate you on your 20/20 vision if so: NA taxes forecast to be 37.14% in 28-29, just below the 37.21% in 1948. Targeted tax rises (non-doms) pay for part of broad cuts (NICs) …

“Chancellor made much of growing GDP per head being the objective, but OBR forecasts are not particularly optimistic – and less so than in November …

“But because of personal tax cuts, living standards recover to pre-pandemic levels by 2025-26 – a significant improvement relative to the last forecast, and one that is good news for people across the country, even if it’s a small rise after half a decade …

“Pre-measures headroom against the Chancellor’s (already loose) fiscal rule was £12bn, dropping to £8.9bn after measures. This includes a farcical assumption that fuel duty will go up – £4.5bn, or 0.1% of GDP excluding it. In the grand scheme of things, that’s effectively zero …

“Barnett consequentials for Scotland in 2024-25 are £295m: mostly additional NHS health spending (£237m) and the LG financial settlement in England (£48m). Nothing on capital next year and only £73m from 25-26 from NHS England – tough outlook remains …

“In fact, public spending outlook remains very challenging for the UK as a whole – day-to-day spending per person barely grows over the forecast, and investment falls by over 8%. Partly how Chancellor makes sums add up – but doesn’t feel very sustainable.”

Institute for Fiscal Studies director Paul Johnson: “We’ve learned to expect some degree of smoke and mirrors in the Budget.

“Today was no different, only on this occasion Mr Hunt decided to tax the smoke and to mirror the Labour party’s tax pledges on non-doms and North Sea oil. Alongside a new tax on vaping and an increase in tobacco duty, this was enough to allow Mr Hunt to announce another, well-trailed cut to National Insurance.

“This £10 billion tax cut will benefit millions of workers. Put it together with the 2p cut from November’s Autumn Statement, and those on just above average earnings will gain around £1,000 a year.

“Focusing tax cuts on National Insurance, rather than income tax, is to be welcomed: doing so reduces the tax wedge between different sorts of income, benefits those of working age in work, and should have marginally more positive work incentive effects.

“On the back of similar cuts in November, it marks a clear break with the trend of the past half-century, during which headline income tax rates have come down and National Insurance rates have, until now, inched up.

“Changing the basis of non-dom taxation to residency, rather than the out-of-date concept of domicile, is a big and welcome move. The rather bizarre method of withdrawing child benefit from high-income families is in need of reform, and the changes coming into effect in April mitigate some of the worst features of the current system.

“Some bright spots, then, though the big picture on tax remains much the same. Come the election, tax revenues will be 3.9% of national income, or around £100 billion, higher than at the time of the last election. This remains a parliament of record tax rises.

“While the OBR got a little more positive in its projections, the picture on living standards also remains dismal. On average, households will be worse off at the time of the next election than they were at the last, following nugatory real earnings growth.

“The OBR marginally increased its forecasts for economic growth, but the overall public finance picture remains largely unchanged from the autumn.

“The Chancellor is still on track to stabilise debt as a fraction of national income in five years’ time, just about, but only on the basis of a pie-in-the-sky promise to increase fuel duties (this time we mean it – promise!) and a set of post-election spending plans that still imply substantial cuts to funding of many public services which are clearly struggling with their current level of funding.

“While his ambition to improve public sector efficiency and productivity is the right one, and his injection of capital funding into the NHS is a sensible way of doing so, delivering on such plans and securing cash savings will be very tough indeed. That capital funding won’t arrive until 2025–26 in any case.

“We should at least be grateful that Mr Hunt didn’t pencil in even larger cuts to as-yet-unspecified public services. Nonetheless, actually implementing his plans would require cutting unprotected services – including councils, courts, further education colleges aand prisons – at around half the pace that George Osborne did between 2010 and 2015.

“Within the realms of possibility, perhaps, but there will be far less in the way of low-hanging fruit this time around, and banking on big improvements in public sector productivity is a risky business. Whoever is Chancellor at the time of the next Spending Review – which the Chancellor confirmed will not take place until after the election – might wish they’d chosen a different line of work.”

Susannah Streeter, head of money and markets, Hargreaves Lansdown: “Jeremy Hunt didn’t have a lot of space to offer treats for voters, but the spread he’s laid out has pleased some investors, particularly for consumer-focused shares.

“The National Insurance cut sweetener and rumours of the fuel duty freeze dangled before the Budget had already done the trick of pushing up shares in retailers.

“Investors are expecting that more pounds in the pocket for middle income workers, through the NI cut, will be shoved into high street and online tills. Marks and Spencer and Next kept hold of earlier gains, while Greggs climbed higher, amid expectations for increased demand for its value ranges.

“Jeremy Hunt wanted to avoid a bond market strop out by sticking to his fiscal rules, and his wish was granted, with the yield on 10-year gilt yields, dropping back. It’s a pretty muted response to a budgetary hat, which was notably short of surprise rabbits.

“The pound dipped back a little as the Chancellor spoke with underlying worries bubbling that the plans will just lead to a sugar rush of spending, rather than laying the groundwork for more sustained growth.

“There was Budget announcement was short of a big bazooka to kick start investment. There continue to be concerns about the lack of funding for public services to improve infrastructure, particularly skills, education and training, with the planned AI productivity boost for the NHS unclear, given potential obstacles ahead.

“Pub chains largely hung onto earlier gains, sparked by hopes of the cut to national insurance, helped by the freezing alcohol duty.

“But hospitality businesses have been crying out for a cut in VAT, amid evidence that people are simply dining in at home to save cash, as pubs, bars and restaurants have been forced to hike prices due to rising costs. So, the freeze is unlikely to provide much respite overall.

“Puffs of speculation about a vape tax and potential further duty increases on cigarettes had already led to falls in the big tobacco giants, and they lost further ground as the policy was confirmed. The duty increase makes the price of cigarettes red-hot and prohibitive for an increasing number of smokers, who may shift to vapes, which will still be cheaper, despite the new tax.

“The industry is jostling for position in the vape market, given declines in tobacco. They remain a small part of the picture but given growth forecasts, more fiscal regulatory action around the world looks likely.

“Housebuilders have had a torrid time in this era of high interest rates, and there is fresh tinkering with relief for landlords which could have an impact on demand. While there appeared to be initial enthusiasm over the reduction in capital gains tax from 28% to 24%, it began to seep away. Investors are also assessing the potential sting in the tail for demand presented by the abolition of holiday lettings relief.

“Energy giants have largely shrugged off the sunset extension of the energy profits level to 2029. Even Harbour Energy, the North Sea’s largest oil and gas producer, was little moved.

“The announcement had been rumoured and companies have already changed some strategies to deal with the levy. What’s moving the dial more is the rise in the oil price to nudge $83 dollars a barrel, after Saudia Arabia hiked some prices for buyers in Asia.

“There is likely to be strong interest in the NatWest share sale, which will be the highest profile public share offer since the Royal Mail IPO more than a decade ago. Giving retail investors the opportunity of a slice of ownership in NatWest is a welcome move, given that they have been left out of previous sales, which have been reserved for institutional investors.

“Prospects are looking up for the bank after a tumultuous year when it lost both its CEO and Chair and the valuation has been under some pressure ever since. But with an attractive entry point, some easing headwinds and strong capital levels, the bank’s current situation is likely to spark enthusiasm.

“It’s clear the economy is in need of an injection of investment and the Government’s ambition to revitalise the market for UK listings is welcome.

“With HL clients are already enthusiastic UK investors with 83% of shares held in UK listings and over 1,000 UK equities available on our platform, a British ISA isn’t necessarily the right mechanism for boosting investment and runs the risk of unnecessarily concentrating portfolios and adding further complexity.

“We would encourage the government to explore options such as increasing the overall ISA allowance and look forward to working with them on the detail.’’

James Sproule, Chief UK Economist at Handelsbanken: “The Chancellor set out three basic proposals in today’s budget.

“He has set out a new Office for Budget Responsibility (OBR) growth forecast, they are more optimistic than the Bank of England, and are forecasting growth of 0.8% in 2024, 1.9% in 2025 (up from 1.4%).

“This forecast allows the Chancellor to remain within his fiscal rules, anticipating that the Debt/GDP will be falling slowly over the next few years, and that Government budget deficit will be below 3%, which is three years earlier than initially anticipated.

“Public sector spending is set to rise by 1% in real terms, as originally planned, and combined with the hope of have public sector productivity rising, the intention is to have better provision of public services while growing the size of the state slightly more slowly than the growth anticipated in the overall economy.

“To help enable productivity, there is to be some investment in Information Technology, the hope being that these projects are more successful than previous programs.

“On tax, the total tax burden continues to rise and initial calculation by independent forecasters is that the level of tax/GDP will rise to all time highs in the next couple of years, the biggest driver being the freezing of tax thresholds (set to remain unmoved until at least 2029).

“The Chancellor did not highlight this, instead focusing on his specific tax reductions, the most significant being the reduction of the rate of National Insurance by 2%.

“National Insurance is essentially income tax (there is no insurance fund), but it is not levied on pensioners and the bulk (all bar 2% which is uncapped) is not levied on earnings above £50,270, therefore any reductions are seen as being more effectively targeted on working people and it is hoped will underpin the recovery in consumer confidence.”

Lindsay James, investment strategist at Quilter Investors: “The latest budget from the Chancellor has revealed some positive adjustments to the economic outlook, as well as some targeted tax cuts aimed at boosting the flagging popularity of the Conservative party.

“However, the overall picture remains one of fiscal restraint and uncertainty, with productivity gains rather than cold hard cash expected to solve the pressures on public services, given little room for manoeuvre in the face of ongoing debt and spending pressures.

“The Office for Budget Responsibility (OBR) has once again revised its inflation forecasts, with inflation now expected to fall below 2% in the coming months, reflecting lower energy prices and subdued demand. This has lowered the government’s interest payments on its debt, as well as reducing the cost of some benefits that are linked to inflation.

“The Chancellor has used this windfall to announce some tax cuts, mainly focused on slashing national insurance. He has also maintained the freeze on fuel duty and alcohol duty and made changes to the Child Benefit system which will ultimately see payments expanded.

“However, these tax cuts must be balanced with the £17bn of tax rises that have already been announced for the next parliament, which include freezing the income tax thresholds in real terms and the expiration of other short-term tax breaks.

“Today’s budget was clearly set with the purpose of reversing the current position the Conservatives find themselves in, given recent polls show the party has the lowest level of support it has seen for 46 years.

“With much made of the Conservatives’ 100 measures to boost the economy and drive growth messaging at the Autumn Statement, alongside a cumulative £900 average cut in National Insurance payments by employees, one measure – electoral polls – have so far shown no improvement at all. The Conservatives will be hoping that this final offering before the general election will be enough to curry favour with voters and will see that change.

“Labour has insisted that if it were to win the upcoming election it would follow the same set of fiscal rules, going so far as citing it as the reason the £28bn a year green industrial strategy recently fell foul of Rachel Reeves’ red pen.

“With fiscal rules that require underlying debt as a proportion of GDP to be falling in the final year of a rolling five-year forecast, this ultimately permits the government to have debt rising as a share of GDP for most of the forecast horizon.

“However, with no explicit departmental budgets published, there is so far no evidence of how this loosest of moving fiscal targets will actually be met.

“With frozen tax thresholds the largest contributor to the rising tax burden, set to drive the number of taxpayers in the higher rate band up by 68% by the end of the OBR’s five-year forecast period, the question remains when these will be addressed – and the answer is still most likely not any time soon.

“Though this is a difficult backdrop for economic growth, there remain reasons to be optimistic. There are early signs of growth beginning to pick up, with business and consumer confidence having improved in recent months.

“Meanwhile, interest rates are still expected to fall in the coming year, oiling the cogs of the economy just as innovation in sectors such as AI and life sciences has taken a giant leap forward, with obvious productivity benefits that the Chancellor is keen to harness.

“If these growth opportunities are successfully employed by whichever government is in power by January 2025, then the economy may be able to drive better fiscal outcomes in the years ahead.”

Lily Megson, Policy Director at My Pension Expert: “There will be millions of people across the UK celebrating the NI cuts.

“Around 27 million of them, in fact. However, the savings are modest – the average UK salary is around £28,000, and someone earning that much stands to save less than £350 a year by cutting NI rates by 2p.

“And we mustn’t forget that the impact of the NI cuts are limited to those in work. Pensioners still fall through the cracks.

“Cutting income tax would have cast a much wider net and ensured that pensioners (who pay income on their pensions in retirement) also benefitted from a savings boost.

“Once again, we must ask ourselves, why has the government taken a limited approach in a move that sacrifices the potential to help millions more people achieve a financially secure retirement?

“Given the party is lagging behind in the polls and Hunt needs policies that appeal to as many voters as possible, choosing NI cuts over income tax cuts seems a misstep.”

Tom Clougherty, executive director of the free market think tank, the Institute of Economic Affairs: “Today’s Budget tax cuts will provide some relief from the rising cost of living, but ultimately won’t do much to revive the stagnating economy that lies behind most of our current woes.

“There is a strong fairness argument for the National Insurance reduction, which will partially offset the impact of frozen tax thresholds. And the long-term ambition to abolish National Insurance and simplify the way we tax earnings is a very welcome one – even if it doesn’t seem likely to come to fruition.

“The Chancellor’s changes to child benefit also went some way towards reducing the harm done by his predecessors. A more radical overhaul – including the planned shift to a household basis – can’t come soon enough.

“Cutting capital gains tax on residential properties is fine as far as it goes. But abolishing Stamp Duty Land Tax – or at least raising the threshold for homes to £1m – would have been a far better way to improve the UK’s antiquated and destructive property tax regime.

“This Budget didn’t really address the UK’s long-term fiscal challenges, particularly around the impact of an ageing population. On the other hand, it did highlight the absurdity of setting tax policy based on highly variable five-year debt forecasts. Fiscal rules should be a good thing, but the way we’re using them makes no sense at all.

“There’s no getting away from the fact that raising living standards in the long run depends on generating faster economic growth. And that means prioritising tax reforms with genuine pro-growth impact, fixing our broken planning system so that we can build more of everything, and accepting that we need to couple spending restraint with major reforms to public services.

“As always, there are good and bad things in this Budget. But if we take a broader view of economic policy, it hasn’t really moved us any closer to where we need to be.”

Tom Minnikin, partner at tax firm Forbes Dawson: “The lack of any changes to the inheritance tax regime will come as a disappointment to middle-class voters, many of whom have been dragged into the inheritance tax net as a result of various allowances and thresholds being frozen.

“Rumours circulated prior to the Autumn Statement that Jeremy Hunt was planning to scrap inheritance tax altogether, but no action was taken.

“Whilst there was less speculation this time round, some had hoped that the Chancellor would increase the nil rate band – the amount which can be left free of inheritance tax – from its current level of £325,000.  The threshold has been set at that level since 2009.  No increases were announced.

“Today’s Budget may reflect the reality that the Conservative Party – despite having aspirations to reform inheritance tax – are unwilling to be exposed to bad press by giving tax cuts to the wealthier in an election year … 

“In announcing changes to the tax regime for non-UK domiciled individuals (non-doms) the Chancellor has stolen one of Labour’s key election pledges.

“Under current rules, non-doms can avoid having to pay tax on their overseas income and gains, provided they do not remit the funds to the UK.

“A charge of £30,000 applies for those who have been resident in at least 7 of the last 9 tax years, rising to £60,000 for those who have been resident in 12 of the last 14 tax years. Once the individual has been resident for 15 out of the last 20 tax years, they no longer qualify for the remittance basis.

“Jeremy Hunt vowed to abolish the favourable regime in a move that is expected to raise up to £2.7 billion. In its place he will introduce a new residence-based system of taxation.  In outline this will mean that non-doms will only benefit from the tax breaks in the first four years of being UK resident.

“After that point, they will pay tax on the same basis as other taxpayers, although there will be various reliefs available over the next two years to ease the transition.

“Being entirely cynical, this looks like an attempt to undermine the Labour party’s election strategy than any strong affirmation of where the Conservative party stands on the issue of non-dom tax, as Mr Hunt had being saying for months that he no intention to make changes.

“With the revenue this change raises being put towards other tax cuts announced today, Labour will be forced to rethink their manifesto pledges, some of which were to be funded by abolishing the remittance basis regime.

“Some might call the Chancellor a hypocrite for on the one hand saying Keir Starmer’s party does not have a plan for government, whilst on the other hand stealing their signature policy. They will certainly need a new plan now though …

“Yet again, there was no change in today’s Budget in the rates of Stamp Duty Land Tax, despite calls from various quarters for incentives to help stimulate the property market.

“Foremost amongst the wish list has been a call to reinstate some form of Help-To-Buy scheme for first-time buyers. The lack of any new assistance for those trying to get on to the property latter will come as a disappointment.

“As more and more households come off existing fixed rate mortgages deals onto higher interest rates only time will tell whether the property market proves to be resilient enough to deal with the significant headwinds that lie ahead.

“There was a smaller announcement in the Budget speech that the Government will abolish Multiple Dwellings Relief (MDR) from 1 June 2024, after a review found the policy not to be meeting its original objectives of supporting investment in the private rental sector.

“MDR applies to transactions that involve two or more residential properties, and allows the purchaser to calculate the stamp duty on the average price. There have been concerns that this has led to avoidance, with some taxpayers claiming relief on spurious grounds, for example by arguing that annexes constitute separate dwellings.

“Whilst in some cases the claims are genuine, the number of cases being found not to qualify has increased significantly.

“This could be as a direct result of the growth in reclaim companies being set up purely to deal in stamp duty refunds where boundaries have been pushed. Either way, the government has had enough and decided to remove the relief altogether.”