By the Halo Financial Team
In a statement that, like most economic news, was overshadowed by Brexit, it was important for both the Prime Minister (who has lost her voice again, unsurprisingly) and the Chancellor of the Exchequer to emphasise the UK’s economic growth “that has defied expectations”.
The tone was deliberately upbeat, but the Chancellor was honest about the continued effects of uncertainty on the UK economy, saying, “To be frank, last night’s events mean we are not where we hoped we would be today. Our economy is fundamentally robust, but the uncertainty I hoped we would lift last night still hangs over it. We must not allow that to continue...”
Mr Hammond used his speech to push for progress on a Brexit deal, saying that a deal would boost the economy: “Leaving with no deal would mean significant disruption in the short and medium term and a smaller, less prosperous economy in the long term, than if we leave with a deal."
He urged the House of Commons to come to a decision: “It is damaging our economy and it is damaging our standing and reputation in the world. Tonight we have a choice – we can remove the threat of an imminent no deal Brexit hanging over our economy… to map out a way forward for a consensus across this House for a deal we can collectively support to exit the EU in an orderly way.”
On track for growth?
Phillip Hammond said the economy is strong and is expected to grow every year of the forecast and faster than Germany, which is seen as an important benchmark for a healthy European economy and one that is failing currently. He referred to public finances improving “thanks to the hard work of the British people” and “difficult decisions we have taken over the past nine years.” However, growth forecasts for the near-term have been revised down – and it is not a reach too far to think this is because of Brexit uncertainty.
Regarding growth forecasts, the Chancellor pledged that the economy should grow 1.2 percent in 2019, 1.4 percent in 2020 and 1.6 percent for the next three years. “The fifth largest economy in the world.”
Mr Hammond said that they expect 600,000 more jobs to be created over the next four years and wage growth is expected to increase by 3 percent or more, saying that there would be “sustainable pay rises for millions of British workers”.
Immigration initiatives to ensure UK is “open for business”
He also referenced the Immigration White Paper and the clear focus on finding the skills and talent the country needs from across the globe.
The government is scrapping paper landing cards and allowing visitors from the USA, Australia, New Zealand, Canada, Singapore, Japan and South Korea to use e-gates at airports and Eurostar stations, in “a commitment to global Britain”.
He also said that they will be exempting PHD level roles from visa caps.
Good news for science and industry
The Chancellor reinforced commitment to technology, research and development by way of continued investment and a focus on technical and vocational training and apprenticeships. They plan to bring forward the reforms announced in the Budget to encourage more apprenticeships and work towards increased productivity. He also spoke about “Delivering a digital economy that will work for everyone."
Philip Hammond likes a cheesy joke or two in his speeches. A new supercomputer will be housed at Edinburgh University. Hammond joked that it “…could come up with the right solution to the backstop”. There is also investment in new lasers, which he joked are “literally at the cutting edge of technology”.
Infrastructure, housing, technology and the environment are priorities
The government is investing in infrastructure, skills, technology and housing. They are prioritising the environment and investing in carbon offsets and environmental protection schemes. Protecting the diversity of the national world was also cited as a priority, with the forthcoming Environment Bill to mandate vital biodiversity, ensuring that the new housing initiatives do not come at the cost of the environment and natural environment.
Mr Hammond referenced a five-year housing programme, planning reform to release land, Help-to-Buy equity loan scheme, abolition of Stamp Duty has helped 240,000 people onto the property ladder, restored proportion of firsttime buyers to above 50% first-time buyers “for the first time in a generation”.
What does it mean for the currency markets?
Halo Financial’s Founding Director, David Johnson, comments, “The Pound is still standing firm against the US Dollar and Euro, with Interbank rates hovering around 1.32 and 1.17 respectively, as today’s economic and political push from the speech offers a glimmer of hope that there will be an end to the interminable uncertainty. Tonight’s all-important vote will steer the way for Sterling – watch this space…”
Get in touch with a Halo Financial Currency Consultant today to see how we can help your business for both the challenges and opportunities of the Spring Statement.