On the 13th March, the Chancellor of the Exchequer, Philip Hammond responded to the forecast from the Office for Budget Responsibility (OBR) in a 2018 Spring Statement. The Spring Statement gives an update on the overall health of the economy and the OBR forecasts. It also gives an update on any progress that’s been made since the 2017 Autumn Budget and it invites people and businesses to give views on changes that the government is considering. We’ve condensed the highlights of the Spring Statement below, so have a read and see if there’s anything that could affect you.
The economy has continued to grow for the last 5 years and has exceeded expectations. Here is the forecasted growth from the OBR:
|Year||GDP growth forecast|
There were a lot of positives to come out of the statement including an update in the rate of employment. Employment rates are reported to have increased by 3 million since 2010, which works out as 1,000 people finding work every day! The OBR expects that over 500,000 more people will be in work by 2022!
More good news if you’re currently employed… The OBR expects inflation to fall in the next year and wages are set to rise quicker than the rise of prices over the next 5 years!
The government is also looking to help improve people’s skills by extending the tax relief to support the self-employed and employees that plan to fund their training. The initiative hopes to improve and support upskilling and retraining and will benefit individuals and the wider economy.
The UK’s public finances have also seen a turning point with borrowing falling by three quarters since 2010. Its reported that in 2009/10 every £4 spent, £1 was borrowed, now the OBR expect the UK to borrow £1 in every £18 this year and debt is forecasted to fall as a share of gross domestic product (GDP) next year. Here is the debt forecast until 2023.
|Year||UK debt (% of GDP)|
Although these figures are looking positive the UK’s debt is still too high with figures equal to £65,000 per household! If all this talk of debt has got you thinking about your own financial position there is support available through organisations which can help such as the Citizens Advice and the National Debtline.
Back in the Autumn Budget in 2017, it was announced that stamp duty for first time buyers for homes under £300,000 would be abolished. An investment programme was also announced to supply 300,000 homes a year by the mid 2020’s. The Spring Statement confirmed that progress is being made with the programme with the following steps taking place:
1. There are 44 different areas working on their bids for part of the £4.1 billion housing infrastructure to help build new homes
2. The housing growth partnership which provides financial support for small housebuilders will be more than doubled to £220 million
3. London will receive over £1.6 billion to start building 27,000 more affordable homes by the end of 2021/22
If you’re looking to buy a first home or even to move to a new property then these changes may benefit you. If you would like to find out some more information on the UK housing market, read our blog here.
Cost of living
It’s also good news for workers as the National Living Wage is set to rise to £7.83 in April 2018! This increase will be worth an extra £600 a year for a full-time worker. The National Minimum Wage rates for under 25’s is also expected to rise and will be the largest increase in youth rates in 10 years. www.gov.uk expect 2 million people to benefit from April’s increases.
As well as this, the amount you earn before you start paying tax (tax-free personal allowance) is also going to rise to £11,850, which means the typical taxpayer will be paying £1,075 less income tax than what they would have done in 2010/11.
Transport in your city
Now spring is here you may be planning your next day out. Maybe you’re hoping to visit a new city by train or going to a festival? Well it could be good news for you as in the Autumn Budget in 2017 it was announced that £1.7 billion would be spent on improving transport in British cities. The government is inviting bids from cities across England for the remaining balance of £840 million! This money comes from the government’s industrial strategy which is supporting transport projects which is expected to increase the productivity and crack down on congestion.
A total of £840 million has already been allocated to some areas. Mayoral Combined Authorities which are bodies formed by two or more local government areas with or without an elected mayor. Six of these Combined Authorities aim to deliver schemes that will make commuter journeys faster, better and safer. So if you’re wondering whether you’re likely to see improvements in your area, see the six Mayoral Combined Authorities and their allocation below:
- West Midlands – £250 million
- Greater Manchester – £243 million
- Liverpool – £134 million
- West of England – £80 million
- Cambridge and Peterborough – £74 million
- Tees Valley – £59 million
Most of us couldn’t live without Wi-Fi so broadband is very important to us! One of the initiatives that was announced back in the Autumn Budget was to launch a £190 million challenge fund to roll out full-fibre broadband to local areas. The aim is to provide the fastest, most reliable broadband to homes and businesses.
Full-fibre broadband uses FTTP (Fibre to the premises technology), which is seen as an effective way to provide fast internet. This process involves using fast-fibre optic cables rather than hybrid copper and fibre systems, which providers hope will support efficient connections. It’s reported that the Orkney Island, Shetland Islands and Highland have the slowest average download speed at just 6.Mpbs (Megabites per second) so there’s hope for you if you live in these areas!
The overall aim is to provide the fastest, most reliable broadband to homes and businesses. In the Spring Statement the first part of the funding was allocated giving £95 million for thirteen areas in the UK. Therefore, you may start to see your internet speed improve if you live in an area where the funding has been given.
The government are now looking at ways to best use the tax system to encourage responsibility when using plastic. Disposable plastics such as cutlery and coffee cups are damaging the environment and now part of the money raised in tax changes will be used to encourage the creation of greener products and services. As well as this, £20 million from current budgets will be used to provide universities and businesses to research ways of reducing the environmental impact from plastics. Since the charge on plastic bags was introduced, there has been an 83% reduction in the usage of plastic bags according to government figures. Seven of England’s major retailers sold six billion fewer single-use plastic bags in 2016/17 compares to figures from 2014/15.