What does the Spring Statement mean for you?

March 13, 2018

Normally around this sort of time we are all preparing for the annual budget, spending review and bracing ourselves for tax changes on a rather large scale.

However this month there was no red box held up by the Chancellor, Philip Hammond as he announced the Spring Statement of 2018.

Back in 2016 it was decided that at the end of 2017, there will be no Spring Budget as by the time they had finished preparing and announcing the first one, they were onto preparing for another one.

I’m sure we can all agree they could cut the length of time they spend debating and procrastinating.

An Autmnial budget will be announced at some point in the Autumn of 2018 and in the Spring we are now being given a simple Spring statement, almost an update on what has been achieved – or not in some cases.

Growth increases

The UK economy, has grown for another year, beating the OBR (Office for Budget Responsibility) estimates of 1.4% t0 1.5%.

Good news one might say, indeed, however the UK will continue to remain in the slow lane throughout 2018 as productivity, as a whole, has dropped due to the erratic decline of the average number of hours worked rather down to the amount of output gained vs the hours worked.

Rising costs of food and related subsidiaries 

Inflation, the big old word that none of us like to here.  The elephant in the room as it were.

Inflation is responsible for determining the cost of any kind of product or consumable that you purchase.  For instance a cost of bread could be at £0.50p today but tomorrow could be £0.65p this cost is determined by a range of factors, one of those being inflation the rest the amount a company marks ups its goods.

However, it is thought that by 2019 inflation would have fallen back to its target of 2% as oppose to its current 3.1% rate.

So yes that does mean that the cost of loaf bread will remain at 0.50p with the potential, I use the word loosely, of it to decrease down to a lower price by 2019.

Of course the government will also deliver on its promise to increase the national living wage to £6.83 at the start of next month.

60,000 more first time buyers

Back in the Autumn the government announced the abolishment of Stamp Duty for first time buyers.

Since then there have been over 60,000 more first time buyers, great news for the property market one might say.

However it is the opinion of the OBR that the abolishment of Stamp Duty for first time buyers will come back and bite the government at a cost of around 15-20% more.

The reason being is housing prices, despite their slow recovery, have increased since 2008, meaning that the cost of your average 3 bedroom house outside of London will now cost the first time buyer within the region £204,163.00 and that figure is on the up.

So if you’re a first time buyer take advantage of the 0% stamp duty whist you can.

Small Business late payments

Hammond did hint towards a change in the way in which businesses could handle companies that pay late.

However, we await to see what changes he will make to the law regarding businesses that do pay their suppliers late.

End of austerity?

If you were expecting to hear that we have done it, that we’re out of austerity, we may have to wait a little longer.

Despite frequent calls from the governments own backbenchers to increase public spending the government is still sticking to it’s plan, however changed that maybe, to bring its deficit under control.

Yet, despite all of this, it is thought that if the UK economy continues to do well over the next 6 months we could well hear the chancellor announce further spending on the public services.

What are your thoughts on the Spring Statement?  Let us know, drop us a e-mail or tweet us.  

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