Spring Statement - 13 March 2019
The following comments were written on the 13th March 2019 immediately following Philip Hammond’s presentation of the 2019 Spring Statement to Parliament. In theory, the government uses the Spring Statement to respond to the most recent forecasts made by the Office of Budget Responsibility (OBR).
In a nut-shell, the OBR forecast that:
- the UK economy will continue to grow, and
- government borrowing, and therefore interest payments, will continue to fall.
Unfortunately, the Brexit debate has compromised the Chancellor’s position and he has found himself in a three-legged race, bound to a Brexit process that delivers no certainty and which makes real forecasting of the UK’s future economic position almost impossible to predict.
If further votes on the Brexit debate take us into a no-deal situation on the 13th March, it looks as if we will see an emergency budget delivered next month, whereas a postponement of the 29 March 2019 deadline would provide breathing space: time to fully consider his options. Readers will no doubt have followed the Brexit votes in Parliament that followed the Spring Statement.
Whatever the outcome, Brexit is proving to be the glue that is holding back real planning – and perhaps real progress - on the part of the Treasury to manage the UK economy in our best interests.
However, what follows is a short summary of the points Philip Hammond did raise today.
- Since 2010 there are more than 3.5m more people in work.
- Employment is forecasted to increase by a further 600,000 by 2023.
- Debt fell last year and is forecast to fall continuously to 2023-24.
Tech and the new economy
- In response to a government sponsored consultation, moves are afoot to update competition rules and increase competition in the digital economy.
- The tech market place will be encouraged to allow smaller firms to participate.
- Regulation may be introduced to make users’ personal data portable. For example, transfer lists of friends to new platforms and search engine histories to new search engines.
- From June 2019, citizens of a number of non-EU countries will be able to use e-gates at UK airports and border crossing points.
- The process of abolishing landing cards will also commence from June 2019.
- Government is to explore schemes to encourage energy efficiencies for smaller businesses.
- Developers will need to build in increases in biodiversity.
- The decarbonisation of gas supplies is to be increased by using green gas suppliers.
- From 2025 new homes will need to meet new low energy standards.
Housing and infrastructure
- The government is on track to increase housing supply to its highest level since 1970 by the end of this parliament with an average of 300,000 properties a year.
- A number of new steps were set out in the Spring Statement including, the use of the Housing Infrastructure Fund and the Affordable Homes Guarantee Scheme to help the supply of more new homes across the country.
National Living and National Minimum Wage changes
- The government has tasked the Low Pay Commission to make recommendations for changes to these rates to apply from April 2020. A response is required by October 2019.
Hampered by Brexit uncertainties, the Chancellor made no tax changes, his next round of changes will have to wait until the next Autumn Budget 2019, or April 2019 if we pursue a no-deal Brexit.
All eyes are now fixed on parliament, and its attempts to achieve a workable Brexit solution that will have cross-party support.
Source: HM Treasury | 13-03-2019