View our 2019 Spring Statement summary

Chancellor Philip Hammond delivered the 2019 Spring Statement yesterday, responding to the latest economic forecasts published by the Office for Budget Responsibility (OBR).

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The OBR revised down its previous UK growth forecast from 1.6% to 1.2%. Borrowing has also been revised down from £25.5 billion to £22.8 billion as a result of rising wages and a ‘strong employment market’.

Mr Hammond outlined a handful of measures in the Spring Statement, such as the bringing forward of the £700 million reforms for business apprenticeships, and appointing an expert to review the latest international evidence on the impact of minimum wages, in order to inform future National Living Wage (NLW) policy after 2020.

The Chancellor also announced consultations and publications on possible future changes. These include restricting the Employment Allowance to businesses with an employer national insurance contributions (NICs) bill below £100,000, and reducing the capital gains tax (CGT) private residence relief on the final period exemption from 18 months to nine months.

For a detailed overview of the latest information, read our 2019 Spring Statement summary.

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2019 Spring Statement – Chancellor provides update on plans to tackle late payments

In his 2019 Spring Statement, Chancellor Philip Hammond outlined detailed plans to tackle the issue of late payments in the UK.

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The Chancellor reiterated the government’s commitment to combat the ‘scourge of late payments’ for UK small businesses. Mr Hammond announced that, going forward, company audit committees will be required to review payment practices and report on them in their annual accounts.

Commenting on the announcement, Edwin Morgan, Interim Director General of the Institute of Directors (IoD), said: ‘We are delighted the government has taken forward the IoD’s specific proposal to tackle late payments. This is a thorn in the side for many small firms, and the reform will ensure the issue gains the board-level attention it deserves at big companies, without compromising good corporate governance.’

A full response to last year’s call for evidence on the issue will be published by the government ‘shortly’.

Chancellor delivers Spring Statement amid ‘cloud of uncertainty’

Chancellor Philip Hammond’s second Spring Statement was delivered against a backdrop of political turmoil, following the voting down of Prime Minister Theresa May’s Brexit withdrawal deal.

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Despite describing the economy as ‘remarkably robust’, the Chancellor offered a clear warning on the potential impact of a no-deal scenario, which he said would put progress on the public finances ‘at risk’ and cause ‘significant disruption’ to the UK economy.

The latest forecasts from the Office for Budget Responsibility (OBR) revealed mixed news on the economy, with the OBR revising down its previous UK growth forecast for 2019 from 1.6% to 1.2%. Meanwhile, the forecast for government borrowing has also been revised down from £25.5 billion to £22.8 billion, with the Chancellor heralding rising wages and a strong employment market.

However, Mr Hammond emphasised the importance of a smooth Brexit transition in securing economic stability, pledging that a £26.6 billion ‘deal dividend’ would be made available to help boost the economy, providing that an agreement can be reached. The Chancellor also confirmed that a full Spending Review will conclude alongside the 2019 Autumn Budget.

Turning to other issues, the Chancellor announced new government investment in the UK’s physical and digital infrastructure, technology, housing and the environment, together with a bringing forward of the £700 million reforms for business apprenticeships previously announced in the 2018 Autumn Budget.

The Chancellor’s statement also confirmed that the government will apply a ‘light touch’ approach to penalties under its new Making Tax Digital (MTD) regime, which comes into effect on 1 April 2019 for VAT-registered businesses. The government will not mandate MTD for any other taxes or businesses in 2020.

Other measures announced include free sanitary products for secondary schools and colleges in England from the start of the next school year, and an additional £100 million fund dedicated to tackling the recent surge in serious violence and knife crime.

2019 Spring Statement – the political reaction

Chancellor Philip Hammond delivered the 2019 Spring Statement to the House of Commons, and stated that the UK economy had ‘reached a turning point’.

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The Office for Budget Responsibility (OBR), which produced the latest economic forecasts for the Spring Statement, said: ‘Economic growth in the UK and globally has slowed since the Budget in October. But tax receipts have performed better than we expected in the final months of 2018/19, and we judge that much of this buoyancy will endure.’

The Shadow Chancellor, John McDonnell, lambasted the Chancellor’s Statement, saying: ‘He’s boasting about the deficit. He’s not eliminated the deficit as we were promised by 2015. He’s simply shifted it onto the shoulders of headteachers, NHS managers, local councillors and police commissioners and, worst of all, onto the backs of many of the poorest in our society.’

Meanwhile, Caroline Lucas, Co-Leader of the Green Party, stated that the government used the Spring Statement to celebrate a ‘tiny improvement in growth’. She said: ‘GDP isn’t a real measure of our society. True indicators are people being treated in hospital corridors, and foodbank use shooting up. Our economy is designed to fail people – and it needs an overhaul.’

2019 Spring Statement – the business reaction

Business groups have responded to Chancellor Philip Hammond’s Spring Statement speech.

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The Federation of Small Businesses (FSB) welcomed the Chancellor’s commitment to tackling the late payments issue. Mike Cherry, National Chairman of the FSB, said that the government must ‘tackle this scourge once and for all’.

He said: ‘The commitment from the Chancellor that the Business Secretary will see this through is welcome, and we are especially pleased that the first measure has been announced – to make a Non-Executive Director responsible for the supply chain through the Audit Committee of every large business, and to report back through the Annual Report on their progress.

‘The end of late payments could finally be in sight. It can’t come soon enough, to bolster small businesses at a time when they are in great need of support and a lift in confidence.’

The response from the British Chambers of Commerce (BCC), however, was decidedly lukewarm. Commenting on the speech, Suren Thiru, Head of Economics at the BCC, said: ‘The Office for Budget Responsibility’s forecasts for the Spring Statement indicate a more downbeat outlook for the UK economy, with GDP growth now projected to be lower in 2019 compared to their previous forecast.’

Meanwhile, the Confederation of British Industry (CBI) praised the Chancellor for making ‘an admirable attempt to set out a long-term vision for the UK economy’ while remaining ‘shackled’ by Brexit. However, it remains cautious about the UK’s plans to implement its so-called Digital Services Tax, especially as the EU has seemingly withdrawn its support of the Organisation for Economic Co-operation Development’s efforts.

Rain Newton-Smith, Chief Economist at the CBI, said: ‘Going it alone on a Digital Services Tax is high-risk, especially at a time when the UK already looks increasingly isolated.

‘The government needs to be doing all it can to encourage investment in the UK and adoption of new technologies, not putting up barriers.’

2019 Spring Statement – the economic picture

In his Spring Statement speech, Chancellor Philip Hammond responded to the latest forecasts as published by the Office for Budget Responsibility (OBR).

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Acknowledging that economic growth in the UK and around the world has ‘slowed since the Budget’ in October 2018, the OBR cut its UK growth forecast for 2019 to 1.2% from 1.6%.

It also revised down its government borrowing forecasts: the OBR expects the government to borrow £22.8 billion this year, which is significantly lower than the £25.5 billion predicted during the 2018 Autumn Budget. The OBR attributed the decrease to ‘higher income tax receipts and lower debt interest spending’.

The OBR stated that it produced its latest forecasts ‘against a backdrop of considerable uncertainty’, primarily generated by Brexit. As a result, it stated that it has ‘no meaningful basis for changing the broad-brush assumptions’ that have underpinned its forecasts since the EU Referendum.

The OBR said that a ‘disorderly’ ‘no deal’ Brexit ‘remains the biggest short-term risk’ to its forecasts.

2019 Spring Statement ? what to expect

Chancellor Philip Hammond will deliver the 2019 Spring Statement today. We will be keeping you up-to-date on the latest developments.

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The Chancellor will respond to the latest economic and public finance forecasts from the Office for Budget Responsibility (OBR), and announce some areas for consultation on the longer-term tax challenges.

Ahead of the Spring Statement, business groups have outlined the actions that they would like Mr Hammond to take. The Trades Union Congress (TUC) has called for the Chancellor to increase funding for public services by an additional £15 billion, and increase capital spending by £10 billion.

Frances O’Grady, General Secretary of the TUC, said: ‘Positive action is needed from the government to direct funds to the public services people depend on and rescue them from breaking point. And every part of Britain must get investment in the modern infrastructure needed for growth.’

Meanwhile, the Federation of Small Businesses (FSB) has urged the Chancellor to tackle the UK’s ‘late payment crisis’; commit to a one-year ‘safe harbour’ approach to Making Tax Digital (MTD) fines; and introduce additional measures to make the business rates system fairer.