Today’s Autumn Statement was in sharp contrast to the big fiscal statements of Rishi Sunak’s era as Chancellor. During Covid, Sunak was throwing money around like a drunken sailor as he sought to mitigate the impact of the pandemic on households, businesses and the health service. There was no such largesse from Jeremy Hunt today, albeit he did change his tact from his previous fiscal statements by turning from tax grabber to tax cutter.
Continue readingThis was a Budget aimed on getting growth going. Two areas were in focus. The first, investment, is a long-standing UK problem. Today’s announcement to allow companies to offset all capital spending against their tax bill is the latest effort to spark it into life. The second, bolstering the size of the workforce, is a relatively new problem to have emerged in recent years. Here there are changes to childcare provision and pensions. But at least both measures are being launched amidst a better growth environment after an upgrade to the outlook from the OBR.
In today’s Budget speech, the Chancellor ate up a lot of time announcing give-aways that are relatively small beer – in some cases, literally. We heard about funding being made available to fix potholes in England; relatively small amounts of money for leisure centres, veterans and Ukrainians; a freeze on duty for draught beer; and even investment in Tipton town centre. Jeremy Hunt spoke for over an hour, but the significant announcements in the speech could have been condensed into much less time.
This was a ‘kitchen sink’ Budget according to the BBC’s Faisal Islam, with the Chancellor throwing almost everything into it, including a wide range of tax cuts and incentives. A mini-Budget it wasn’t. But there was little to explain how it would all be funded. The shadow Chancellor Rachel Reeves perhaps explained it best when she said that “never before has Government borrowed so much and explained so little”.
Image Source: BBC News
Continue readingIt was billed as a difficult Budget to navigate. Growing spending pressures that were in play before the pandemic have been compounded by Covid-19-related catch-up demands, including health and education. Interest rates have been inching up, too, making debt repayments a bit pricier. Throw in a brewing cost of living crisis amid building inflationary pressures and looming tax hikes, and it looked like very tricky terrain indeed. So how was the Chancellor going to navigate it?
Today’s Budget was largely as expected. Much of the content had been flagged beforehand, and then there were the big manifesto pledges that were off limits. But that’s not to say it wasn’t a significant Budget, and it may indeed be the last, or penultimate, big spending Budget. Rishi Sunak today announced £37.5billion of spending in the current financial year and the next. Apart from last year’s Budget, it is, by any historical comparisons outside of the pandemic, a huge amount of spending. What’s concerning though is that spending in future years is going to be cut at progressively larger amounts, and next April will therefore herald the start of four consecutive years of public spending cuts. On the tax front, there were further cuts or extensions of existing tax cuts in some areas but also tax rises in others.
Today’s Budget announcement was part of a stimulus ‘double-bill’. The Bank of England unveiled a massive impetus this morning, with a 50-basis point cut in the interest rate and more importantly a package of targeted measures to guarantee credit flow to businesses given the looming threat of Coronavirus.
This afternoon’s instalment in the form of Rishi Sunak’s debut Budget complemented this by acting to ease cash flow concerns for households and businesses. In addition, the public spending taps have been turned on to support public services and to enable investment in infrastructure – in relation to everything from climate change to transport and housing. One thing that was missing however was any meaningful increase in taxes. Normal Budgets are generally a careful balancing act of revenue-raising and spending commitments, but not today, which was a rather one-sided affair in that it was overwhelming focused on spending.
Where is all of this money coming from if not from tax rises? The answer is borrowing. The UK is set to borrow £300billion over the next five years.
Continue readingIn many ways, yesterday’s budget could be summarised as spend now, tax later.
The Chancellor opted not to make any changes to tax or spending policy at last week’s Spring Statement, so instead the focus was firmly on the economic assumptions that underpin the public finances.
Richard delivered a presentation this morning to business people in Portadown about yesterday’s Budget. Here are his slides. You can also read his Budget analysis here.
