Spring Statement 2018 Summary

It was widely anticipated that the chancellor's spring statement would not contain many surprises and that expectation was met. ISA and pension legislation remained untouched, the report focused mainly on the economy and public finances.

The economy is (so far) winning its Brexit battle

The expectation was that the UK would enter a recession after the results of the referendum on leaving the EU, however, this has not eventuated thus far. According to the Office for Budget Responsibility (OBR), growth is forecast at 1.5% for 2018, up from the 1.4% predicted previously.

The OBR has predicted however, that growth will fall to 1.3% in 2019 and 2020, before rising to 1.4% in 2021 and 1.5% in 2022. Manufacturing is a particular bright spot, as the sector is enjoying its longest period of expansion in 50 years.

But the economy is not out the woods yet….

However, the lack of productivity growth in the UK is a significant concern, and the economy is growing relatively slowly when compared with the rest of the G7 nations. Mixed signals regarding the economy continue to be broadcast, with a projected rate increase contrasting with a leaked government document that asserted that the UK would be worse off outside the EU, with economic growth predicted to be 5% lower over the next 15 years in one scenario.

The housing market

There was a section of the statement that was dedicated to the housing market, in which it was announced that 300,000 homes will be built per year by the middle of next decade. London will also be a recipient of funds to this end, with £1.67 billion earmarked for the construction of 27,000 homes before the end of 2021-2022. The new stamp duty exception for first time buyers has been taken up by 60,000 new property owners.

Households

The personal allowance will increase to £11,850 in from April 6, leading to the average taxpayer paying £1,075 less income tax compared with 2010/2011 according to the government.  

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Information is based on our current understanding of taxation legislation and regulations which is subject to change.

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