“The Pound was treading water against the Euro at around 1.12 and the US Dollar at around 1.32 in advance of the Budget,” comments David Johnson, founding director at currency company, Halo Financial. “Despite weaker economic growth predictions announced in the Budget speech, the Pound seems to be standing its ground at similar levels, even inching up against its major currency pairings, the US Dollar and Euro.”
How is the economy doing?
The UK Chancellor of the Exchequer, Philip Hammond, stated that the UK economy continues to grow, to provide more jobs than ever before, and is set on a path to a new relationship with European neighbours and a new future outside European Union. He emphasised that the road ahead was “full of new opportunities”. He said that we must “look forwards, not backwards, meet the challenges head on and seize the opportunities for Britain.”
Key stats and facts
What about Brexit?
- 2017 growth forecast down from 2% to 1.5%
- 2018 economic growth forecast cut from 1.6% to 1.4%
- Borrowing down over 8 billion from Spring Budget – forecast at £49.9billion for 2017, £8.4 billion lower than what was forecast in the March 2017 Budget.
- Productivity growth revised down
- Before the Budget, industry commentators warned that the Chancellor is not able to control the biggest factor affecting the UK economy – Brexit.
- The Chancellor did not shy away from addressing the importance of Brexit in his opening comments, stating that “one of the biggest boosts to businesses and families is to make early progress.”
- He added that “the future relationship with the EU is in critical stage”, reiterating that “…we are seeking a deep and special partnership… based on strong mutual respect and friendship.” Going on to say that he is, “determined to ensure that the country is prepared for every possible outcome.”
- Mr. Hammond attempted to reassure businesses with promises of an implementation agreement for businesses and “free and frictionless trading”.
- The Chancellor confirmed that the UK government has already invested over £700 million in preparing for Brexit and will be setting aside another £3 billion on Brexit preparations.
- A vision of Britain “Fit for the future”, today’s Budget buzz phrase, was repeated again.
- The Chancellor said that Britain is “at forefront of technical revolution” – but we “must invest to secure bright future, announcing £2.3 billion investment in R&D.
- The business rate cut will be brought forward, "providing saving of £2.3 billion".
- Tax breaks confirmed for transfers of North Sea oil and gas fields.
- The VAT threshold for small businesses will be kept at £85,000.
- Mr. Hammond said that the Budget need balanced approach – the government is aware of squeezed UK families, and need to be helping families to cope with cost of living.
- Important measures will include increasing targeted affordability funding for areas where rents are highest.
- “Making work pay” – this is why they introduced National Living Wage. This will rise to £7.83.
Key stats and facts
- Personal income tax allowance to increase to £11,850 in 2018.
- The higher rate tax threshold will go up to £46,350
- Tobacco prices to rise 2% above Retail Price Index (RPI) inflation. Minimum cigarettes excise duty that came into force following the March 2017 Budget will also go up. Duty on hand-rolled tobacco will also rise.
- Duty on beer, wine, spirits and the majority of ciders to be frozen – although the strong, “white ciders” will go up in price.
- The planned fuel duty rise for both petrol and diesel cars will not take place.
- Duty on diesel cars not up to latest standards will go up by one band from April 2018. This will not apply to van owners.
- Company car tax diesel supplement will go up 1%.
- Air passenger duty for short haul and long haul economy flights will be frozen. Premium flights to go up.
- The government plans to introduce a £1.5 billion package addressing concerns about Universal Credit. This includes scrapping the seven-day initial waiting period for processing claims and for claimants to get one month's payment within five days of application.
- The repayment period for advances will also lengthen to 12 months, from six.
- New universal credit applicants who are in receipt of housing benefit will also continue to receive it for two weeks.
- 320,000 people helped by Help to Buy scheme
- Stamp Duty will be scrapped for first-time buyers on properties up to £300,000.
- In London and other areas where properties are more expensive, stamp duty will not be charged on the first £300,000 on properties of £500,000.
- The government has a goal to build 300,000 homes each year by the mid-2020s.
- A 100% Council Tax premium will be charged on empty properties – part of an initiative to provide affordable housing for those who need it.
- There will also be a task force to help those who are homeless.
- The UK government plans to increase computer science teachers to 12,000 – they are viewed as at heart of UK’s “technical revolution”.
- The Government, CBI and TUC are teaming up to support training and skills in the construction sector, including digital and distance learning
The UK government will continue to invest in infrastructure, and the Northern Powerhouse in particular.
An additional £2 billion will be made available to Scotland, £1.2 billion to Wales, and £650 million for Northern Ireland
This Budget’s top joke was at the expense of Jeremy Clarkson, with Mr. Hammond saying that is was “not the first time he’s been snubbed by Hammond and May.” Very clever…
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