Fiscal Policy and Economic Backdrop
Spring 2023

As the UK avoided a technical recession, the HM treasury’s survey of 18 economic forecasts has shown a slightly more positive outlook, although still with a wide range of predictions. Perhaps most important is that inflation is still expected to peak in 2023, which in turn should ease pressure on interest rates. The average view is still of negligible to no GDP growth this year and only modest growth in 2024. One effect of higher rates is that Sterling exchange rates have reached $1.25 for the first time since June 2022 and have sustained that level well into April.

Fiscal

The day after Chancellor of the Exchequer Jeremy Hunt’s first full budget, the government announced that as part of this they would close a Capital Gains Tax loophole which can leave the Taxman out of time to assess tax due on capital gains when an asset is under unconditional contract where it is transferred over six months after the end of the tax year, or for companies, one year after the end of accounting period. The changes affect transfers after 6 April 2023 for CGT, and 1 April for corporation tax.