Early thoughts on the Chancellor’s Spring Statement
Few Chancellors of the Exchequer have been known to compare themselves to the chief optimist of Winnie the Pooh, but today Philip Hammond would prefer we liken him to ‘Tigger’. This character is known for bouncing around, but is this ‘spring’ in Hammond’s step warranted?
The Spring Statement was predicted to be low-key; in terms of actual content it was, given there were no major changes to tax or spending as Hammond sticks to his principle of one budget per year. Despite the fact it looks as if the UK economy is – on current predictions – heading for the slowest growth of any G20 nation, he still referred to his statement as a ‘turning point’ for the economy. After all, “forecasts are made to be broken”, Tigger reminded the Commons.
In perhaps his most cheery speech on the economic situation ever, the Chancellor has attempted to emphasise that growth in 2017 exceeded his own prediction of 1.5% by checking out at 1.7% (still just an increase of 0.2% but considered good news by HM Treasury in the context of Brexit). That ‘bounce’ was not enough for our new-found Tigger, as he declared his revised prediction for growth in 2018 is 1.5% up from 1.4%, alongside news the OBR has stated inflation will fall back to the Bank of England’s 2% target.
The general mood music of this Spring Statement feels like an optimistic warm-up act from Hammond for the Autumn Statement when he offers up hints of more cash for public spending in the future. Likewise, he was clearly happy with news borrowing will reduce as time marches on and that the OBR is predicting the creation of more jobs annually for the remainder of this Parliament.
All of this will mean, the Chancellor says, that households will start to feel better off in real terms in early 2019.
It is worth noting that housing made a prominent appear in this statement. A deal with the West Midlands to build 215,000 homes by 2030-31 is in the offing, aided by a £100 million grant from the Land Remediation Fund. London too is due to received more cash for affordable housing. This shows Hammond is sticking to his pledge of devolution in house building to address the crisis, as per his budget commitment last year. Watch this space as further details are set to emerge.
Thirteen consultations and associated updates were announced too. Among them are taxing single use plastics, future infrastructure for the economy and whether the VAT threshold is a disincentive to small businesses expanding. All consultations are available here.
We asked whether the Chancellor is right to be so Tigger-like? Forecasts are forecasts, and predictions are predictions, it may be too early to say. However, the Chancellor certainly believes that there is room for cheer today.