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March 2017

UK watches this year’s Budget with greater anticipation than ever before

Published: Wednesday 08 March 2017

By Rachael Kinsella
Any Budget is important, but this takes place in unprecedented times. Brexit pervades every aspect of this, the last Spring Budget under UK Chancellor, Phillip Hammond. We know he is cautious and this will be a cautious and carefully-worded Budget, but there are certain political areas that need to be navigated, in addition to solving some big “crunchy’ long-term problems the country faces, such as:
  • Improving tax system?
  • Changes in technology?
  • Pensions?
  • Social care?
  • More investment and funding for industry?
Markets are hoping and looking for a more positive tone, acknowledging that we’re in a good economic place before Brexit – but we doubt this will be reflected in the speech, which is likely to be brief and matter-of-fact, judging by the short and sweet Autumn Statement just six months ago.
Looking back at the Autumn Statement, which was given in a “time of peak gloom” as uncertainty around Brexit circled, we will want to see progress and discussion around the UK’s borrowing figures, which are falling every year, but not hitting the target for “balancing the books”. We saw here a lot of investment into infrastructure and the ‘bricks and mortar” of the UK – experts now predict that this Budget will focus more on the human elements.

Businesses have had a mixed bag from this government
Since the Autumn Statement, economic news has been far more positive – we have seen consistently strong manufacturing and service sector figures, for example, with a stream of positive data coming from UK business and industry. Will this be reflected in today’s speech? Will we see upgraded growth predictions once more? UK Prime Minister, Theresa May, made a point of emphasising the strength of the UK economy during Prime Minister’s Question Time, advance of the Budget speech.

Businesses have had a mixed bag from this government and will be looking to the Chancellor to stimulate business spending and grow the country’s industrial strategy – a focus has been taking on and training new workers, attracting and nurturing talent and a diverse workforce, injecting more funding into particular industries. It’s also all about business rates and their implications for growing and internationalising UK businesses – we know that there will be sharp rises in some areas of the country, so we will be looking for any balance to this from a boost in investment and funding for businesses in those areas. There may also be a drop in rates in some other regions.

The Budget will also need to reflect the rising costs for UK exporters and importers, which could have a significant effect on UK businesses and represents an area that is crucial to the success of the economy.
We don’t expect Sterling to move much in response to the speech, unless there are any big, shock announcements, which we believe are unlikely in the context of the Chancellor’s approach. But what we’ve learned over the past year is to expect the unexpected –so, watch this space…
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