Spring Statement 2018
Chancellor Philip Hammond said it would be a short, snappy affair when he delivered the government’s first Spring Statement to the House of Commons today, and this was indeed to be the case – it took just 30 minutes to cover the key points.
The statement focused on the latest forecasts for the economy and the public finances provided by the government’s independent forecaster, the Office for Budget Responsibility (OBR), which last reported in November 2017.
The Chancellor, who commented that he was feeling positively ‘Tiggerlike’, confirmed OBR reports that the economy has grown for five consecutive years, and exceeded expectations in 2017. GDP growth is forecasted at 1.5% in 2018 (up from 1.4%), whilst inflation is expected to fall over the next 12 months. Borrowing has fallen by three-quarters since 2010 – In 2009-10, the UK borrowed £1 in every £4 that was spent. The OBR expects that we will borrow £1 in every £18 this year.
However, the Chancellor went on to say that the UK’s debt remains too high, equal to around £65,000 per household and this makes the economy vulnerable to future shocks. The government also views this as significant burden on future generations. The cost of debt interest payments is around £50 billion each year – more than the amount spent on the police and armed forces combined.
The government has previously stated a firm commitment to balancing its approach to reducing debt whilst continuing to fund public services, keeping taxes low, and investing in Britain’s future. With this in mind, the Chancellor confirmed that the Treasury would be keeping a careful watch over the public purse in the coming months and if, and only if, scope became apparent for any manoeuvrability with regards taxes and further funding for public services, then any such announcements will be made in the Autumn Budget.
As expected, no changes to tax were announced in the Spring Statement. However, in advance of the 2018 Autumn Budget, a series of consultations has been launched inviting views on possible future changes to the tax system. These are summarised in the following published blog posts: