Written by: Keith Tully
Published: 13th March 2018
After moving the main budget to the autumn with the intention of giving businesses more certainty throughout the year, Philip Hammond promised a brief affair when he addressed the House of Commons this afternoon to deliver his Spring Statement. With no red briefcase or official document to hand, the Spring Statement was a low-key event lasting just a touch shy of 30 minutes.
As predicted, Hammond did not unveil any drastic new measures or policy changes; instead he used his moment in the spotlight to update his fellow MPs, and the nation, on the state of the UK’s economy, public spending, and respond to the latest fiscal forecasts from the Office for Budget Responsibility (OBR).
During his relatively brief speech, Hammond painted an optimistic picture of the country’s economic position, suggesting that Britain is finally making some headway on its debts following years of tough austerity measures as the country will return to day-to-day spending surplus in 2018-19.
Borrowing is set to fall to £45.2bn, down from the predicted £49.9bn, following increased tax revenues. There is also good news when it comes to economic growth, which is predicted to be higher than what was previously expected, rising from 1.4 per cent up to 1.5 per cent. Inflation, currently at 3 per cent is also expected to return to its 2 per cent target over the next 12 months.
Buoyed by these figures, Hammond’s optimism for the future was clear, resolutely declaring that ‘forecasts are there to be beaten.’ However, these figures do not mean an end to austerity; with the country still £1.8 trillion in debt, which equates to a colossal 86.5 per cent of national GDP, the government are eager to bring this down through adopting a ‘balanced approach’ to public spending. Hammond announced a full and in-depth spending review will take place in 2019 during which he will take stock of the position of the public finances, and should they remain in good shape, public spending will be increased.
Speaking of businesses, Hammond reiterated his support of those who create wealth and jobs. He announced the next business rates valuation will be brought forward and will now take place in 2021, with reviews every three years from then on. He also promised an £80 million fund to those businesses looking to take on an apprentice. There was also the announcement of an investment programme of £44 billion to raise housing supply to 300,000 a year by the mid-2020s.
While no major tax, spending, or policy changes were announced, Hammond did reveal some areas he sees as ripe for future consultation, including implementing a tax on single-use plastic such as takeaway containers, plastic bottles, and coffee cups, as well clamping down on digital conglomerates such as Google, Amazon, and Facebook not paying tax on their profits in the UK.