The Spring Statement 2018- Opinion
The annual Budget statement in the UK has become something of a fixture for business and commentators, with many poring over the output for indications of change that will impact them. The problem of late on this regular economic activity is that the rules have changed and we now have two statements a year, one more important than the other. Today, we had the Spring Statement 2018, a kind of little brother to the big autumn event but nonetheless eagerly anticipated as it could give some indication of the spending and taxing plans to come. It didn’t, really.
We did understand that there will be a variety of consultations on important matters like business taxation, plastic in society, innovation among SMEs, and especially housing with a clear indication that the latter topic is at the heart of future Government thinking to help transform a sluggish, slowly growing, economy. So more homes, more activity to create them, more spending in the supply of them, and thus more tax income we presume.
So, if one was expecting movement in other key areas – pensions or savings for example – then these are deferred until later most probably. Even the biggest political topic de jour – Brexit – was barely mentioned today, although we do know that there will be a spending review in 2019 which most likely will come after the withdrawal date from the EU. The true cost of Brexit is thus postponed or at least not fully known, for a bit, although the current assumptions on the costs to Government over the next few years are set out fully in the OBR analysis.
In a lighter vein what we did learn is that the Chancellor believes he has been misunderstood as a politician, and unlike those who would see him as a dull, plodding, Eeyore-ish type are wrong; in fact, he is a direct opposite to this and is the most Tigger-ish figure in the Government. This may have come as much a surprise to his Cabinet colleagues as it did to anyone listening as the economic analysis he delivered, in a slightly-less-than-Tigger-ish way than you would expect, was more a party-political listing of why the Government is right, and on track, and others are wrong.
In truth some of the economic data is with him in this respect as the OBR confirms: borrowing and debt are going in the right (down) direction, and there is a little light at the end of his spending tunnel to indicate that fiscal relaxation could come this autumn. This is realistic progress, but what it means for those currently struggling with inflation outstripping wage growth, remains to be seen.
So, we await the next episode of this gripping economic drama. Whatever that may contain we should look forward to the Chancellor’s delivery. If he continues to be a Tigger then we can expect a quote: ‘bouncy, pouncy, flouncy and a trouncy creature who is always looking to have fun no matter what the situation might be’. Can’t wait.
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