The Chancellor described his mood as quite "tiggerish" on Tuesday as he delivered his Spring Statement, at once making a reference to a much loved Disney character while also creating an image of himself which satirists and political cartoonists will surely pounce upon with glee.
On the one hand there is much to be pleased about in the statement. Growth in 2018 is set to be higher than expected (up by an astonishing 0.1% from the 1.4% originally forecast) and public sector borrowing has not only declined but is projected to continue doing so (for the next few years, at least).
Beyond the usual sea of bar charts, shifting percentages and caveats from leading accountancy firms, however, there are a few stand out themes that have emerged:
One of the more widely praised moves is an effort to tackle the issue of "late payers". This has been enthusiastically welcomed by small businesses across the country, who have suffered for too long with larger business exploiting their greater bargaining power in order to delay or avoid paying others within their supply chain. Some smaller businesses hope that this might mark the end of the days where their suppliers can alter terms mid-contract or bury additional costs within the small print.
Though details are still awaited, the Chancellor has again hinted that more will be done to tackle so called "tech giants" (Google, Facebook etc.) and the complex schemes adopted by them in order to minimise their tax liabilities. In particular, the focus will be on online selling amid growing concerns that the correct level of VAT is not being paid to the treasury on some such sales. This will be an interesting issue to watch, given that the tech sector employs over 1.5 million people in the UK and was responsible for almost £7bn worth of investment in 2016 (more than any other EU country).
While good news for those looking to get on the property ladder in England, the new Stamp Duty Land Tax ("SDLT") relief for first time buyers looks like it may cost the government more than initially intended; of course, from 1 April 2018, Welsh buyers will be subject to the Land Transaction Tax managed by the Welsh Revenue Authority. The Office for Budget Responsibility suggests the cost could be between 15-20% greater than anticipated, largely because the houses being purchased by those using the relief are more expensive than the government had expected. At the current rate, accountancy firm Blick Rothenburg predict the relief will result in a £1bn loss in revenue within the first year alone. While costly from a treasury perspective, the enormous usage of the relief and the incentive to first time buyers will be music to the ears of housebuilders and property developers.
Modest yet steady
At first glance, it might seem that the Spring Statement was an understated but broadly positive projection of modest yet steady growth and improvement. In actual fact, it suggests that there are changes on the horizon which will have a significant impact on two of the most sizable sectors in the UK economy (the property and tech markets) along with a huge number of small businesses all over the country.
For more information on the spring statement or any aspect of this article please contact our Public Sector team
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