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.Continue reading
Rishi Sunak may only have been Chancellor for five months but he is already a crisis veteran. Having already splashed out hundreds of billions of pounds worth of support – £281.5bn since 11 March 2020 – today’s package added a further £30bn. Phase 1 of the Chancellor’s response was about protection via blanket support for the economy. Significantly Phase 2 of the economic response, today’s package, is more targeted support and focussed on jobs. The third phase is rebuilding.Continue reading
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 reading
The Bank of England’s latest forecasts show inflation staying above the 2% target, despite rising UK rate expectations. Prices should get a further boost from the looser fiscal policy announced in the Budget. But, as ever, all those forecasts hinge on a smooth Brexit.
In many ways, yesterday’s budget could be summarised as spend now, tax later.
President Trump imposes tariffs to protect heavy industry whilst a new group of countries slashes barriers.
After the sobering downgrade to our prospects for productivity growth comes the scramble for solutions. The new industrial strategy, if fulfilled, is a good place to start.
The UK housing market is tipped to feature prominently in the Chancellor’s Budget. A range of initiatives are expected to be unveiled, targeted primarily at the younger generation. There are calls for a shift in emphasis from ‘Help to Buy’ to ‘Help to Build’ schemes. It remains to be seen how Northern Ireland will benefit from these. But it’s worth considering how the Northern Ireland housing building sector is currently faring. Continue reading
Chancellor Philip Hammond’s first and last Spring Budget was a modest affair and a perfect advert for holding just one fiscal event each year.
Chancellor Philip Hammond surprised those anticipating a boring Budget by littering his speech with jokes and gags. However, there were definitely none of the pyrotechnic policies that were prominent in the last Chancellor’s Budgets (e.g. the sugar levy), as the substance of ‘Spreadsheet Phil’s’ announcements lived up to his nickname. And, needless to say, the state of the public finances remain no laughing matter. Continue reading