Spring Statement 2019 Overview

The Chancellor, Philip Hammond, presented his first Spring Statement on 13th March 2019. Whilst he vowed to free up more money to help end austerity in a “deal dividend”, he warned that tax cuts and spending increases are dependant on a smooth Brexit.

Here is a summary of some of the key points discussed.

Economy

• Whilst growth forecasts for 2019 were cut from 1.6% to 1.2%, the economy has grown for nine consecutive years and the Office for Budget Responsibility (OBR) forecasts it will continue to do so for the next five years
• Wages are expected to keep growing at rates of above 3% over the next five years
• The unemployment rate of 4.0% is the lowest since 1975 and the OBR predicts a further 600,000 people will be in employment by 2023
• Borrowing has been revised down – spending for 2018/2019 alone is almost £3bn lower than predicted by the OBR in October’s budget

Public Services

• A £800m increase in non-NHS spending was announced by the middle of the next decade
• A similar amount will be allocated to the NHS
• £100m will be made available to help tackle knife crime over the next year via police overtime and new ‘Violent Crime Reduction Units’

Technology

• Following publication of the Digital Competition Expert Panel’s review, the Chancellor announced the government will respond to the report’s call to update competition rules within the digital market to increase choice and innovation for consumers
• Subject to a smooth Brexit, the Competition and Markets Authority (CMA) has said it will undertake a study of the digital advertising market to assess how regulation affects competition in the UK

Attracting Overseas Visitors

• From June 2019, citizens of the US, Canada, New Zealand, Australia, Japan, Singapore and South Korea can use e-gates at UK airports and Eurostar terminals to help reduce queues, increase the flow of passengers and improve the UK border experience
• Landing cards will be abolished from June 2019

Housing and Infrastructure

• The government will publish its first National Infrastructure Strategy later this year, setting out how to embrace the latest technologies, decarbonise the economy and create a 21st century infrastructure
• To help smaller businesses reduce their carbon emissions and energy bills, the government is seeking views on proposals for a new Business Energy Efficiency Scheme focused on SMEs
• A call for evidence on Offsetting Transport Emissions was made to give people the option to travel ‘carbon-free’ by providing them with a better understanding of their transport-related carbon footprint and how they can offset them
• £717m has been allocated to help build up to 37,000 new homes across London, the Oxford-Cambridge Arc and Cheshire
• Up to £3bn of borrowing has been guaranteed via the Affordable Homes Guarantee Scheme to support the delivery of around 30,000 affordable homes

The Chancellor also confirmed that the government will hold a Spending Review which will conclude alongside the Budget. However, many of the future outcomes will be dependent on when, or if, Theresa May secures a good deal for Brexit.

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Sources:
https://www.gov.uk/government/news/spring-statement-2019-what-you-need-to-know
https://www.bbc.co.uk/news/business-47554876
https://www.investmentweek.co.uk/investment-week/news/3072491/spring-statement-2019-top-ten-takeaways