Written by: Claire Januszewski
Reviewed: Wednesday 13th March, 2019
Yesterday’s meaningful vote saw MPs reject May’s Brexit deal for a second time, piling on yet more uncertainty over the future direction of the country. Today the spotlight turned to the Chancellor, Philip Hammond, when he delivered the Spring Statement this lunchtime.
Coming just two weeks before Britain is set to leave the EU on 29th March, and just a few hours before MPs were to vote on the potential of a no-deal Brexit, it is safe to say that the Chancellor’s moment on the podium was somewhat overshadowed.
The Spring Statement is no longer a major fiscal event following the Budget being moved to the autumn. Instead it is the Chancellor’s opportunity to provide an update on the UK’s current economic position, rather than to announce any new tax or spending measures. It is likely that any change to public spending will be saved until the Spending Review which is expected later this year.
Financial predictions from the Office for Budget Responsibility (OBR) showed a higher than expected start to the year, although going forward, much will depend on how Britain’s exit from the EU is managed. The growth forecast has been lowered from 1.6% in the last budget to just 1.2%; however, long-term growth predictions have been increased. Borrowing this year has also fallen, and employment figures are up.
Perhaps looking to entice those still undecided on which way they were going to vote in the impending ‘no-deal’ vote, Hammond announced a three-year spending review including extra money for public services, but only if a no-deal Brexit is avoided. This additional pot of money would be generated on the back of increased consumer confidence and a following economic boost. He made clear his belief that should Britain exit the EU without a deal, this would have a damaging effect on future growth and public finances and inflation would have to be closely monitored.
In other measures, the Borderlands region has been boosted by a £260m injection of funds, while PhD-level roles will no longer be subject to visa caps in a push to stimulate scientific research and development projects, and schools will be provided with sanitary products funded by the Government. Low pay was also promised to be tackled, perhaps hinting at future increases to the National Minimum Wage and National Living Wage rates.
Knife crime was pledged to be tackled through £100m of additional funding split between increasing police overtime and violence reduction units. £3bn has been earmarked to build 30,000 affordable homes as part of the ‘Affordable Homes Guarantee’. New housing will also be subject to stricter measures to protect the environment and reduce the reliance on using fossil fuel for heating.
He reiterated his promise to crack down on global technology giants to ensure they are paying the tax they should, not only helping to increase revenues for HMRC but also to level the playing field for smaller companies competing in the same space. A review into the activities surrounding digital advertising will also be undertaken in an effort to protect consumers in this space.
Hammond’s speech ended in much the way it started, with his warning over a no-deal Brexit. Nailing his colours to the mast, Hammond made no secret of his desire to avoid Britain leaving without a deal, and voiced his concerns over the threat this could pose to the economy both immediately and also in the long-term.
Claire is a copywriter working within the digital content team at Begbies Traynor. Her areas of expertise are business insolvency and all areas of personal finance. She has written for a variety of online and print publications, and her work has been published in a number of national newspapers, including the Daily Mail, the Daily Telegraph, and the Daily Express.