The Chancellor presented the first Spring Statement, a change in name and format to what was the Spring Budget. The new format was much shorter in length and lacked the big-hitting announcements of previous years.
Philip Hammond reported a positive outlook of faster-than-expected growth; up to 1.5% from 1.4%. This was against a backdrop of a reduction in the deficit, which fell to £45bn from £49bn, perhaps not as far as pre-budget speculators had expected.
Unemployment rates fell further – now at a 40-year low – and the government forecast a real wages increase for workers in light of an expected fall in inflation. Workers will also benefit from an increase in minimum wage levels, with those over 25 earning £7.83 per hour from 1 April 2018.
Business owners will be supported with £80m of funding, but there was a lack of detail on where this would come from and how it would be applied. The Chancellor announced the first wave of funding for full-fibre connectivity for 13 areas in the UK.
The Autumn Budget in November announced a freeze of the VAT threshold at £85,000 for 2 years with a consultation to follow, and there was a call for evidence to allow the government to decide what to do. It is expected that a reduction in threshold may occur after the deliberation, bringing thousands of businesses into VAT registration.
Although there was little detail in the speech, the treasury have committed to review the system of taxation for multinational digital businesses to ensure they pay their ‘fair share’, a clear warning shot to the likes of Google and Amazon.
For those aiming to get on the property ladder, the government renewed their commitment to supply 300,000 new homes by the mid-2020’s.
The Spring Statement was an unknown quantity, being the first in the new form, and business owners are likely to be underwhelmed by a lack of new support, but clear statements of progress in areas such as transport, broadband connectivity and the general economy will give some comfort.
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