Spring Statement - Predictions and Hopes

“If the Chancellor’s previously stated intentions are to be believed, the Spring statement (due to be made on Wednesday) will not include any tax announcements as these are supposed now to be confined to the Autumn budget. If last year is anything to go by, the Chancellor will find it impossible to resist saying something about Tax, even if it is only to underline the Government’s continued determination to tackle tax avoidance. Regrettably any real commitment to modernising and simplifying our tax system, which is so badly needed, will be absent.

But this time the Spring statement comes in the middle of a week which may prove to be the most dramatic and indeed significant in modern times, certainly in peace time. The lack of any breakthrough on the Northern Ireland backstop seems to make it inevitable that the Prime Minister will lose her “meaningful vote” tomorrow (which we are promised will be going ahead) and this could be followed on Wednesday by a vote ruling out a “no deal” Brexit and on Thursday by a decision in Parliament to seek a delay to Brexit. Indeed an extreme but not impossible outcome might see us without a Prime Minister by the end of the week.                                                                                                            

It is difficult to see what the Chancellor could possibly have to say that won’t be buried by those possible developments but clearly he has to paint a real vision of a successful economy after Brexit, which he has so far failed to do. There remain many positive economic factors including a lower than forecast budget deficit on the back of higher than expected tax receipts, and a historically high UK employment rate. Expect the Chancellor to make much of these positives as he should. However, there are significant negatives including strong evidence that there is already a strong outflow of capital out of the UK economy in the direction of other EU economies and beyond. The real test will be of Mr Hammond’s ability to strike a confident and credible tone about the benefits of at last ending the present uncertainty and even, if we leave on the 29th March without a deal, (which he strongly opposes but which seems a strong possibility), how we will strike out to grasp the opportunities and deal with the challenges that will bring.”

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