Posted on: 13 March 2018
This year’s Spring announcement from Chancellor of the Exchequer, Philip Hammond, has been somewhat downgraded to a recap on the economic forecast and update on public finance predictions. A spokesperson for the Treasury told the Financial Times there was “no red box, no official document, no spending increases, and no tax changes”. This is the first year that the Spring Statement has been condensed to a modest 25 minute message.
Following last year’s election, Hammond is still erring on the side of caution in terms of spending to prevent future shock to the economy citing that the debt ratio is still at a concerning 86%. He has stressed that today’s announcement won’t see any further financial allocations but will signpost much of what’s to come in the Autumn Budget later this year.
Prior to today’s Spring Statement, Hammond told BBC1’s The Andrew Marr Show "There is light at the end of the tunnel because what we are about to see is debt starting to fall after it has been growing for 17 continuous years. That is a very important moment for us but we are still in the tunnel at the moment".
Here is a summary of his announcement and what it means for your business:
- No tax changes but no spending increases either
- Growth in 2017 has been reported at 1.5% ahead of the Office for budget Responsibility (OBR) prediction of 1.4% in November and growth is set to continue throughout 2018
- Consumer Price Inflation (reported at 2.7% in January 2018) is expected to fall back to the 2% target in the next 12 months
- Next year a typical tax payer will pay £1,075 less income tax than in 2010-11
- The education secretary will release up to £80M in funding to support small firms in providing apprenticeships
- Next month the construction skills fund will be open for bids
- Hammond will review ways to assist the least productive businesses to catch up with the most as well as methods of reducing late payments to small businesses
- Next business rates valuation will be brought forward to 2021
- Supporting the white van man by consulting on tax cuts for low emissions vans
- Hammond will consult on a new VAT collection mechanism for online payments
- Further downward revisions of debt and borrowing – the first sustainable decline in debt for 17 years
- The current manifesto balances debt reduction against the need for ‘investment in the future’
- Brexit is on the horizon and it’s thought that the economy may need more support in 2019 than 2018. The Chancellor reiterated that he has set aside £1.5bn for Brexit planning
- The Chancellor has committed to setting a responsible spending path for 2020 and beyond in the Autumn Budget
- Hammond confirmed the previously announced National Living Wage will increase by 33p from £7.50 to £7.83 from April 2018.
While today’s announcement has been more of a financial sense check, it has set the scene for the full 2018 Autumn Budget. Business groups and financial advisors have welcomed this simplification towards one main budget statement a year.
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