Budget 2023 – live updates: Pension lifetime allowance and childcare changes at a glance

The Chancellor also confirmed the government would add £11bn to the defence budget over the next five years.

Jeremy Hunt said: “Today, following representations from our persuasive Defence Secretary, I confirm that we will add a total of £11bn to our defence budget over the next five years and it will be nearly 2.25% of GDP by 2025.

“We were the first large European country to commit to 2% of GDP for defence and will raise that to 2.5% as soon as fiscal and economic circumstances allow.”

Jeremy Hunt laid out the economic forecast for the next five years, claiming the UK would not now enter a recession.

He said: “Let’s turn now to what the OBR say about our growth prospects. In November, they expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023. That left many families feeling concerned about the future.

“But today, the OBR forecast we will not enter a recession at all this year with a contraction of just 0.2%. And after this year the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027.”

Tax on draught beer in pubs will remain frozen from 1 August this year, chancellor Jeremy Hunt has announced.

Delivering his Spring Budget on Wednesday, Mr Hunt said he would “significantly increase the generosity of draught relief” which he said could not have been done inside the EU.

Mr Hunt told MPs: “From August 1 the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee. British ale may be warm, but the duty on a pint is frozen.”

Mr Hunt said the change will apply to “every pub in Northern Ireland” due to the Windsor Framework.

The chancellor announced a series of levelling-up and local transport-related funding pots.

Jeremy Hunt told the Commons: “I will invest over £200m in high-quality local regeneration projects across England including the regeneration of Tipton town centre and the Marsden New Mills Redevelopment Scheme. I am also announcing a further £161m for regeneration projects in Mayoral Combined Authorities and the Greater London Authority.

“And I will make over £400m available for new Levelling Up Partnerships in areas that include Redcar and Cleveland, Blackburn, Oldham, Rochdale, Mansfield, South Tyneside, and Bassetlaw.

“Having listened to the case for better local transport infrastructure from many Members, I can announce a second round of the City Region Sustainable Transport Settlements, allocating £8.8 billion over the next five-year funding period.”

On potholes, Jeremy Hunt said the £500 million allocated would be increased by a further £200 million next year to help communities “tackle this problem”.

Mr Hunt also said: “For Scotland, Wales and Northern Ireland this Budget delivers not only a new investment zone but an additional £320 million for the Scottish Government, £180 million for the Welsh Government and £130 million for the Northern Ireland Executive as a result of Barnett consequentials.

“On top of which in Scotland, I can announce up to £8.6 million of targeted funding for the Edinburgh Festivals as well as £1.5 million funding to repair the Cloddach Bridge.

“I will provide £20 million of funding for the Welsh Government to restore the Holyhead Breakwater and, in Northern Ireland, I am allocating up to £3 million to extend the Tackling Paramilitarism Programme and up to £40 million to extend further and higher education participation.”

Jeremy Hunt announced a policy of “full expensing” for the next three years and with an intention to make it permanent.

He explained: “That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. It is a corporation tax cut worth an average of £9 billion a year for every year it is in place.”

Mr Hunt said the measure is expected to increase business investment.

He added: “I understand the party opposite (Labour) is reviewing business taxes. Let me save them the bother. They put them up, we cut them.”

The chancellor said the government would not rest until the UK is “Europe’s most dynamic enterprise economy”.

He told MPs: “We already have lower levels of business taxation than France, Germany, Italy or Japan. But I want us to have the most pro-business, pro-enterprise tax regime anywhere. Even after the corporation tax rise this April, we will have the lowest headline rate in the G7 - lower than at any period under the last Labour government.

“Only 10% of companies will pay the full 25% rate. But even at 19% our corporation tax regime did not incentivise investment as effectively as countries with higher headline rates.”

Mr Hunt also laid out measures the Government had already taken to encourage business investment, telling the Commons: “For larger businesses we have had the super deduction, introduced by the Prime Minister, which ends this month.

“For smaller businesses we have increased the Annual Investment Allowance to £1 million, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits.”

Jeremy Hunt confirmed nuclear power would be classed as “environmentally sustainable” to drive investment in the energy sector, and said he would launch “Great British Nuclear” to bring down costs.

The chancellor said: “To encourage the private sector investment into our nuclear programme, I today confirm that subject to consultation nuclear power will be classed as ‘environmentally sustainable’ in our green taxonomy, giving it access to the same investment incentives as renewable energy. Alongside that will come more public investment.”

Announcing “two further commitments to deliver our nuclear ambitions”, he added: “Firstly, following representations from our energetic Energy Security Secretary I am announcing the launch of Great British Nuclear which will bring down costs and provide opportunities across the nuclear supply chain to help provide up to one quarter of our electricity by 2050.

“And secondly, I am launching the first competition for small modular reactors. It will be completed by the end of this year and if demonstrated to be viable we will co-fund this exciting new technology.”

The chancellor announced an “AI sandbox” to boost support for artificial intelligence businesses in the UK, as well as a “quantum strategy” to support the future of computing.

Jeremy Hunt said: “I can report to the House that we will launch an AI sandbox to trial new, faster approaches to help innovators get cutting edge products to market, work at pace with the Intellectual Property Office to provide clarity on IP rules so generative AI companies can access the material they need, and ask Sir Patrick Vallance’s successor, Dame Professor Angela McLean, to report before the summer on options around the growth duty for regulators.”

He added: “Because AI needs computing horsepower, I today commit around £900m of funding to implement the recommendations in the independent Future of Compute Review for an Exascale supercomputer. The power that AI’s complex algorithms need can also be provided by quantum computing.

“So today we publish a quantum strategy which will set our vision to be a world leading quantum enabled economy by 2033 with a research and innovation programme totalling £2.5 billion.”