Sandwiched between Brexit votes with fundamental implications for the UK economy, today’s Spring Statement was thoroughly overshadowed.
The Chancellor kept to his plan and resisted the temptation to announce any major tax or spending changes, nor were there any new ideas – perhaps understandable given all of the Treasury’s resources and focus have been elsewhere.
We knew heading in that the immediate prospects for growth were poor; this was confirmed as it was announced that the OBR’s growth forecast has been reduced significantly, to 1.2% - the weakest growth rate since 2009.
However, a partial counter to this is the health of the jobs market – with employment continuing at a record high, and real wage growth of above 3% forecast to continue over the next five years.
The Chancellor held fire on the long-awaited easing of austerity – instead using the improvement in public finances as an opportunity to open the chequebook later in the Autumn Budget, if and when we have more clarity on Brexit.
It was confirmed that Making Tax Digital (MTD) will not be mandated for any other taxes or businesses until 2021 at the earliest. This will reassure businesses and allow them time for proper testing and implementation.
In an effort to clamp down on late payments to small businesses, it was also announced that Audit Committees will now be required to review their payment practices, and report on them in their annual accounts – further details of which will be announced in due course. This is a positive step for public accountability, but also yet another increase in the already-heavy list of responsibilities placed upon Audit Committees.
There was also a welcome focus on productivity – including updates to apprenticeship reforms – and a mention of further funding for the Industrial Strategy, although the details of this are as yet unclear.
The irony of making financial policy based on continued uncertainty and the possibility of the UK leaving the EU without a deal – just hours before Parliament votes on whether ‘no deal’ will indeed be allowed to happen – has not been lost on anybody.
The Chancellor again asserted that a ‘no deal’ scenario would be extremely damaging to the UK economy, and gave as strong a steer as he possibly could to MP’s voting tonight.
I remain confident that a significant ‘Brexit dividend’ could be realised – with businesses investing, consumer confidence improving and markets growing – with , and only with, a properly managed deal.