Mr Hammond’s 2018 budget, delivered to Parliament today, was billed as one of the toughest political juggling acts of a generation.
With the Prime Minister having basically ‘spent the budget’ in her conference speech, the pressure was on for the Chancellor to deliver an ‘end to austerity’. Comparisons were being drawn to the time when Tony Blair committed to huge NHS spending just ahead of Gordon Brown’s 2000 budget – starting the end of a beautiful friendship. However, the stakes are much higher in 2018, than they ever were – nearly two decades ago.
This budget had to be about helping Britain through darker times and reassuring voters that a sensible and ‘flexible’ plan is in place to enable the UK to react to the March Brexit deadline. This Chancellor has not really come up with much to cheer us up to date – so how did he do this time?
I thought a brief theme of ‘the good, the bad and the muddled’ might be most fitting:
The Chancellor came out fighting with this budget. He was buoyed by recent better economic news.
The Office for Budgetary Responsibility (OBR) have forecast a better growth rate for the UK economy in 2019.
The Chancellor was also able to predict that UK borrowing will be down to its lowest levels for 20 years by 2024.
Digital Platform Giants with over £500million in profits per year are to be targeted with a UK Digital Services Tax. This is in an attempt to redress the balance to help high street shops.
Furthermore, the Chancellor promised a reduction in Business Rates by a third over the next two years for many businesses and a £675million fighting fund for local councils to help rejuvenate their retail spaces and free up much needed housing.
Enterprise Allowances are to be increased and the valuable Entrepreneurs relief is to stay at 10%.
E-Gate incentives were also revealed for US and Canadian residents – to allow swifter checking in for non EEA residents. This offered a message that the UK is ‘open for business’
Notice that much of the ‘good news’ really is more about ‘concept’ and not so much about details.
Buy to let investors were once again hit by a Capital Gains clampdown for properties which were not solely their main residence.
There was also a tightening around the rules for self-employed contractor businesses that supply services to larger organisations.
There will doubtless be more catches in this budget that will come out in the detail in the coming months.
There was very little detail around ISA limits and Pension contribution limits. Obviously our priority is our client portfolios!
It seems there is very little room for personal ‘giveaways’ from this Chancellor. Gone are the heady days of ‘rabbit out of the hat’ announcements.
This budget was far more self-assured and I believe it went some of the way towards bolstering UK morale. The Chancellor received considerable space within which to speak and the watcher got the sense that things may just be heading in a more decisive direction.
The FTSE 100 rose nicely throughout the afternoon as it took in the budget facts. There were plenty of ‘good news’ snippets throughout this budget to offer some cheer.
However, there was really very little detail to get excited about. The purse strings remain tight for personal tax planning. This is actually understandable as the country faces a huge challenge ahead. In a way it almost feels as if a budget didn’t happen today – merely some political sparring where the Chancellor probably came off best.