Yesterday, Chancellor Philip Hammond delivered his Spring Statement – here are the main points given in the Statement regarding the economy and how these changes could potentially affect taxpayers.
Key Points
Economic growth
- UK gross domestic product (GDP) is set to grow by 1.2% in 2019
- Then 1.4% in 2020, and 1.6% in the following 3 years
- Hammond has said the economy has defied expectations
Borrowing
If we leave the UK with a deal, Philip Hammond has forecasted:
- Borrowing will be £3 billion lower in 2018-2019 than what was forecast in Autumn statement
- The following amounts will be borrowed in each period:
- £29.3bn in 2019-20
- £21.2bn in 2020-21
- £17.6bn in 2021-22
- £14.4bn in 2022-23
- £13.5bn in 2023-24
Debt
- As a share of GDP, debt is forecast to be 82.2% in 2019-20.
- Debt is expected to fall to 79% in 2020-21, and down to 73% by 2023-24.
Spending review
- A full spending review will take place before the summer recess, Hammond says, assuming that the Brexit deal is agreed over the next few weeks.
- He has also stated there will be a “deal dividend” from lifting business uncertainty, and he encourages firms to invest in the dividend. If no deal is agreed upon, the government would be able to spend some of the money left in reserve.
Brexit
- The £15.4 billion headroom in public finances that could be used in a no-deal Brexit has increased to £26.6 billion.
- A no-deal scenario would mean a smaller and weaker economy, Hammond says. He also warns of higher prices for consumers, and that a no-deal Brexit would mean a “short to medium-term reduction in the productive capacity of the economy.”
- Tax and spending responses could only ever be temporary to handle a no-deal Brexit, in order to avoid higher levels of inflation
Productivity
- Hammond has stated that the spending review will set capital budgets this summer to protect record levels of spending
- The government aims to “slay once and for all the twin demons of low productivity and low wages and build an economy that works for everyone”.
These are some of the key points put forward in the Chancellor’s Spring Statement – to see more, read this article by The Guardian.
Will Your Taxes Be Affected?
There were no major announcements in Mr Hammond’s Spring Statement regarding taxes – however it has been said that if the government goes ahead with a “Deal Dividend” this will be announced during the next review in Autumn, and it is possible the dividend will be split between lowering taxes, funding public services and capital investment.
If you are worried about how Brexit or these Economical changes may affect your business, do not wait any longer to get in touch – we understand that these are uncertain times for UK businesses and we want to help you. Send us a message today or give us a call on 0161 637 1080.
J&P Accountants: Blog 