2018 Spring Statement round up
Posted by Liz Rees in Government and taxation category on 14 Mar 18
We've outlined some key details and summarised yesterday's Spring Statement, to help you separate the wheat from the chaff.
- Whereas in November the Office for Budget Responsibility (OBR) was projecting that government borrowing would be £49.9bn in 2017/18, it is now forecasting £45.2bn. The drop is hardly surprising: ten months into the fiscal year the government had borrowed just £37.7bn, helped by the second highest ever recorded surplus of £10bn in January.
- Economic growth in 2017 was 1.7% according to the latest Office for National Statistics estimate. While that number is better than the OBR’s November 2017 projection of 1.5%, it is still below the March 2017 forecast of 2%. The OBR’s November Budget estimate of 1.4% for the current year has now been increased by 0.1% to 1.5%, but for the next two years the OBR has left its growth projections unchanged at 1.3%.
- Inflation has reappeared, largely because of the post-referendum decline in the value of the pound. At the time of the March 2017 Budget annual inflation on the Consumer Prices Index (CPI) measure was running at 2.3%: the latest figure (for January 2018) is 3.0%. In November the OBR forecast for inflation in 2017 was 2.7%, falling to 2.4% this year. The OBR has left the 2018 projection unchanged, with a fall to 1.8% expected in 2019.
- Sterling has strengthened from its 2017 autumnal lows, but it is still 10% below the level it reached in June 2016, immediately before the referendum. As crunch dates near for Brexit decisions – 29 March 2019 is exit day – the pound could come under pressure again, aggravating the Bank of England’s problems in meeting its inflation target.
The 2018 Spring Statement Round Up was produced by Technical Connection if you require personal advice on how the budget affects you we strongly recommend you seek Independent Financial or Tax Advice.
To read our 2018 Spring Statement Round Up in full open the attached document
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