Page 2 - Spring Statement - March 2022
P. 2
24 March 2022
The Spring Statement: The Detail Behind The
Headlines
The Chancellor surprised many commentators with his Spring Statement which was more of a
mini-Budget.
The Economic Background
If a week is a long time in politics, then the near five months since Rishi Sunak’s second 2021
Budget feels close to a lifetime. Back on 27 October, it looked like 2022 would be a year of
recovery in which the pandemic faded in the rear-view mirror and ‘transitory’ inflation duly
transited to lower levels. It has not worked out like that.
Omicron was the first disruption, although thankfully its main impact was limited to increased testing costs. Then
came the closely linked duo of surging energy prices and rising inflation. When the Chancellor presented the Autumn
Budget, CPI inflation was 3.1% (for September 2021), down 0.1% from the previous month (the last downward dip in
the graph). That rate set the level of pension and benefit increases from next month.
By early February the latest inflation reading was up to 5.5% (for January 2022) and the Chancellor was launching
£9bn of help with utility bills. More than half of the assistance was a heat-now-pay-later loan arrangement, predicated
in the belief that energy prices would not be rising beyond October. Exactly three weeks after Mr Sunak’s
announcement Russia invaded Ukraine, adding another boost not only to volatile energy costs, but also to a swathe of
other commodity prices.
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