Spring Statement 2018 and Tigger – the wonderful thing about Chancellor Hammond is he is the only one
Commenting on the Chancellor’s Spring Statement 2018, Jonathan Riley, head of tax, Grant Thornton UK LLP said:
“Today the Chancellor presented his first Spring Statement as the UK moved from two fiscal occasions to a single tax and spending event that will take place each autumn.
“Hammond was in upbeat mood and was at pains to play down his Eeyore reputation.
“In the short to medium term the forecasts look good – higher tax revenues result in government surpluses so as to pay down the UK’s eye wateringly high debt. The Chancellor was confident on growth, on inflation and interest rates and as a result, confident that earnings will start to rise in real terms – vital for so many just about managing.
“What this also means is that by the time of the Budget in the autumn we can expect announcements that increase funding on essential public services. This suggests not only the NHS but also in respect of adult and child social care. It may also impact on infrastructure too as that was mentioned several times in terms of what has been achieved – albeit the Northern Powerhouse was conspicuous by its non-mention.
“This was not an occasion for tax measures – but there was much announced outside of the speech on consultation. Big conversations will take place on how online trading can be taxed (a tax based on turnover is a possibility) and on the VAT threshold – high at roughly three times UK average earnings and seen by many as a disincentive to growth – although any change would impact small traders and when Hammond suggested very modest National Insurance increases last year, he succumbed to the small business lobbying groups.
“Today was upbeat, but by the autumn we will know whether we have a Brexit deal or whether the UK will be moving straight to World Trade Organisation rules. So while Philip Hammond was the only one at the government despatch box today, the donkey in the room, the Eeyore, is still Brexit.”