22nd November 2017
The 2017 Budget in a nutshell
In his second Budget as Chancellor, Philip Hammond has announced a number of key changes, with the most notable being the immediate abolition of stamp-duty for first-time buyers. Despite being forced to admit that growth and productivity forecasts have been downgraded, a splurge of new investment is apparent, particularly when it comes to preparing for Brexit. Here’s Davenham’s take on the key announcements which we feel will be relevant to our clients and contacts…
The state of the economy
As expected, the growth forecast for 2017 has been downgraded from 2% to 1.5%, in addition to productivity, growth and business investment also being revised down. However, it’s not all bad news! The annual rate of CPI inflation forecast is set to fall towards the 2% target later this year, and another 600,000 people are predicted to be in work by 2022. The final cherry on top comes in the form of £3bn being set aside over the next two years to prepare the UK for every possible outcome when leaving the EU – some light at the end of the Brexit tunnel?
Looking to the future for businesses
Small businesses rejoice as the VAT threshold is to remain at £85,000 for the next two years, and a further £2.3bn will be allocated for investment in research and development – great news. Things are definitely advancing digitally too, with £500m in support for 5G mobile networks, full fibre broadband and artificial intelligence, and a further £540m to support the growth of electric cars, which will include more charging points.
Stamp-duty abolished immediately and further investment in housing
Stamp duty will be abolished immediately for first-time buyers purchasing properties worth up to £300,000, meaning an incredible 95% of all first-time buyers will benefit from the change. The reduction will apply immediately in England, Wales and Northern Ireland although the Welsh government will have to decide whether to continue it when stamp duty is devolved in April 2018. Looking forward for housing, £44bn will be allocated in overall government support for housing to meet the target of building 300,000 new homes a year by the middle of the next decade, and a further £400m to regenerate housing estates and £1.1bn to unlock strategic sites for development.
The state of public finances
Beginning with good news, annual borrowing hit £49.9bn this year, which is actually £8.4bn lower than the figure forecast in March, and borrowing is forecast to fall in every subsequent year onwards. Debt will peak at 86.5% of GDP this year, then fall to 86.4% next year and continually decrease to reach 79.1% in 2022-23.
Local and transport updates
Beginning with great local news, it was announced that there will be further devolution of powers to Greater Manchester! When it comes to transport, there is going to be a £1.7bn city region transport fund which will be shared between six regions with elected mayors, in addition to £30m allocated to improve mobile and digital connectivity on the TransPennine rail route. Finally, the young person's railcard is going to be extended to 26-30-year-olds, giving them a third off rail fares, meaning cheaper travel for many more people.
All in all, we feel there are a number of positives that have come out of this Budget announcement, but if you have any queries or concerns as a result of any changes, please don’t hesitate to get in touch with a member of the Davenham team on 0161 832 8484.
The state of the economy
As expected, the growth forecast for 2017 has been downgraded from 2% to 1.5%, in addition to productivity, growth and business investment also being revised down. However, it’s not all bad news! The annual rate of CPI inflation forecast is set to fall towards the 2% target later this year, and another 600,000 people are predicted to be in work by 2022. The final cherry on top comes in the form of £3bn being set aside over the next two years to prepare the UK for every possible outcome when leaving the EU – some light at the end of the Brexit tunnel?
Looking to the future for businesses
Small businesses rejoice as the VAT threshold is to remain at £85,000 for the next two years, and a further £2.3bn will be allocated for investment in research and development – great news. Things are definitely advancing digitally too, with £500m in support for 5G mobile networks, full fibre broadband and artificial intelligence, and a further £540m to support the growth of electric cars, which will include more charging points.
Stamp-duty abolished immediately and further investment in housing
Stamp duty will be abolished immediately for first-time buyers purchasing properties worth up to £300,000, meaning an incredible 95% of all first-time buyers will benefit from the change. The reduction will apply immediately in England, Wales and Northern Ireland although the Welsh government will have to decide whether to continue it when stamp duty is devolved in April 2018. Looking forward for housing, £44bn will be allocated in overall government support for housing to meet the target of building 300,000 new homes a year by the middle of the next decade, and a further £400m to regenerate housing estates and £1.1bn to unlock strategic sites for development.
The state of public finances
Beginning with good news, annual borrowing hit £49.9bn this year, which is actually £8.4bn lower than the figure forecast in March, and borrowing is forecast to fall in every subsequent year onwards. Debt will peak at 86.5% of GDP this year, then fall to 86.4% next year and continually decrease to reach 79.1% in 2022-23.
Local and transport updates
Beginning with great local news, it was announced that there will be further devolution of powers to Greater Manchester! When it comes to transport, there is going to be a £1.7bn city region transport fund which will be shared between six regions with elected mayors, in addition to £30m allocated to improve mobile and digital connectivity on the TransPennine rail route. Finally, the young person's railcard is going to be extended to 26-30-year-olds, giving them a third off rail fares, meaning cheaper travel for many more people.
All in all, we feel there are a number of positives that have come out of this Budget announcement, but if you have any queries or concerns as a result of any changes, please don’t hesitate to get in touch with a member of the Davenham team on 0161 832 8484.