The Spring Statement: Spring Forward or Freeze Frame?
Article posted: 12th March 2018
The Chancellor, Philip Hammond, will give the Government’s first ‘Spring Statement’ to Parliament this Tuesday at 12:30.
Why is this interesting?
Well, 18 months ago, at the Autumn Statement 2016, the Chancellor announced he’d be scrapping the Budget in March and instead delivering it in the Autumn. The Spring Statement would then take the slot left vacant by the March Budget and would in essence be the Government’s response to the OBR’s forecast. The OBR (Office For Budget Responsibility) are mandated to deliver two forecasts per year - in the Spring and the Autumn.
What will the Statement contain?
According to the Treasury’s information to date there will be no changes to tax and no spending announcements. There may be news on consultations under way and the launch of consultations that address long-term challenges, but otherwise it will be the Government’s response to the OBR’s forecasts for growth and borrowing.
What is forecast by the OBR?
It looks likely that the OBR’s figures will show a downward revision of borrowing forecasts. City of London analysts have suggested a figure between £7bn and £11bn. The OBR forecast will also contain an estimate of the annual cost of the Brexit divorce payments to the EU, agreed in principle by the Prime Minister in December 2017. Expect these figures to draw most of the news post Statement on Tuesday!
Should we bemoan the demise of the Spring Budget?
that depends on your view as to whether tax changes are needed and when they should be implemented. If nothing else, no further meddling in an already vastly complicated tax system can only be a good thing. The Institute for Fiscal Studies had previously called for just one fiscal event a year to make things easier for taxpayers. It will be interesting to see whether future politicians, and indeed The Chancellor this week, will be able to hold off from using the Spring Statement to make political capital.
Follow @mcbridesllp on Twitter this Tuesday as we respond to the Chancellor’s first Spring Statement.
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