“Squeezed between the drama of this week’s Brexit votes it would be easy to have overlooked that the Chancellor today made his Spring Statement. This is not a Budget as we know it; that now takes place in the Autumn and is when the annual tax and spending announcements are made. The Spring Statement is an opportunity for the Chancellor to update on the overall health of the economy and the Office for Budget Responsibility’s (OBR) forecasts for economic growth, and the public finances.
As we predicted he would, Mr Hammond made much of the economic good news around tax receipts and high employment. But he revealed that projected growth in the economy for 2019 has been downgraded from 1.6% to 1.2. Nevertheless our economy has enjoyed nine consecutive years of growth, and has grown faster than France, Italy or Japan, and the OBR has forecast further growth every year for the next 5 years. Year on year Government borrowing has already been reduced by four-fifths since 2009-10 and debt fell last year, and is forecast to fall continuously, to 73.0% of GDP in 2023-24, compared to the peak of 85.1% in 2016-17.
Not surprisingly there were some headline initiatives which included:
Spending to Reduce Crime
A package of £100m of spending was announced, to be targeted to reduce knife crime in the most violently affected areas.
Tech and the New Economy
Significant additional support was announced for cutting-edge science and technologies that will transform the economy, create highly skilled jobs, and boost living standards across the UK. Specifically the Chancellor welcomed the Furman review, an independent review of competition in the digital economy, which has found that tech giants have become increasingly dominant. The Chancellor announced that the government will respond later in the year to the review’s calls to update competition rules for the digital age – to open the market up and increase choice and innovation for consumers.
Housing and Infrastructure
The Spring Statement set out further steps to deliver the ambition including a commitment of up to £260 million for the Borderlands Growth Deal, which on top of the £102 million announced recently for Carlisle from the Housing Infrastructure Fund means up to £362 million UK Government funding into the Borderlands area.
It is clear that whatever relatively good economic news there is subject to both the realities and the uncertainty factor of just what solution we end up with to the Brexit question. The outcome of this week’s votes may still leave a great deal of uncertainty about the timing and manner of our exit, the terms of any possible delay, and the possibility of a change of Prime Minister or even a further election. Achieving certainty and stability is an essential aspiration for our country and for businesses which are striving to make the best of the opportunities which do exist.”
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