As part of a revised format with the Budget pushed back to the Autumn, today’s announcement was never expected to contain any real surprises. Instead, it contained a review of government spending, the launch of several consultations and updates on the health of the economy.
We have included some of the key points below.
- The OBR has increased its forecast for growth in 2018 by 0.1% to 1.5% – although the outlook for 2021 and 2022 were downgraded by the same margin (0.1%), perhaps acknowledging the uncertainties ahead.
- The Chancellor did not signal an end to austerity measures but pledged to increase public spending should the economy continue to outperform OBR growth forecasts.
- Borrowing was revised down from £49.9bn to £45.2bn for 2017/18, however this was not as big a fall as previously expected.
- Inflation is expected to fall to 2% by the end of the year, leading to wage growth in real terms from the first quarter of next year.
- The Chancellor gave little detail away with regards to Brexit, though stated that substantial progress on negotiations had been made. The government will, later today, publish the departmental allocations of £1.5bn of Brexit preparation funding for 2018/19.
- It was revealed that 60,000 first-time homebuyers have benefited from the Stamp Duty relief introduced in the Autumn Budget.
- An acceleration of planned tax changes impacting contractors and how ‘off payroll’ workers are taxed, was not announced as rumoured. The changes are still expected to be extended to the private sector in 2020 as previously announced.
- The next revaluation for business rates has been brought forward to 2021, after which the government will move to revaluations every three years.
- A review was pledged on late payments to small businesses, with the government assessing how they can reduce this major burden on small businesses.
- It was announced that £80m of funding will be released to support small businesses to engage with apprentices.
- The housing growth partnership, which provides financial support for small house builders will be more than doubled to £220m.
A series of further consultations were unveiled including:
- A consultation on a new VAT collection mechanism for online sales.
- A review into helping the least productive businesses to catch up with the most productive.
- A review into a litter levy seeking views on the best way to change the tax system to encourage the responsible use of plastic.
- A follow up publication will explore potential solutions to taxing large global technology businesses.
There were no real surprises and the economy appears to be in reasonable shape. We may find that the continuation of austerity measures allows the Chancellor more room for manoeuvre at the Autumn Budget, but we will just have to wait and see how the economy pans out over the coming months.