The Chancellor of the Exchequer, Phillip Hammond, presented the latest Budget to Parliament on 8 March: a review of the UK’s finances and economic forecasts. Here is an overview of the key points of the Budget 2017:
UK economic growth
In 2016 the British economy grew faster than Japan, France and the United States. Amidst the major advanced economies, Britain’s growth in 2016 came second only to Germany.
The economic forecasts remain broadly unchanged since the Autumn Statement; the International Monetary Fund (IMF) has predicted global growth at 3.4 per cent in 2017, whilst the Organisation for Economic Cooperation and Development (OECD) forecasts 3.3 per cent growth this year.
The Office for Budget Responsibility (OBR) has upgraded the UK and now forecasts GDP growth of 2.0 per cent in 2017, slowing at 1.6 per cent in 2018, and picking up to 1.7, 1.9, and back to 2 per cent in each of the following three years.
All major sectors of the economy made a positive contribution to growth in 2016, with services output increasing 2.9%, construction 1.5% and production 1.2%. Private business surveys suggest that all sectors have continued to expand in the early months of 2017.
Devolution and investment
Elections for mayors in the six major UK cities will take place in May and local areas will be involved in shaping their own economic future. Additional funding was announced for the devolved administrations; seeing £350 million for the Scottish Government, £200 million for the Welsh Government, and £120 million for an incoming Northern Ireland Executive.
Following the launch of the Northern Powerhouse strategy in the Autumn Statement, a Midlands Engine Strategy will be published addressing productivity barriers across the Midlands.
Supporting British businesses
In his speech to Parliament, Hammond said: “we are building the foundations of a stronger, fairer, more global Britain” – aiming to provide a strong and stable platform as the country starts negotiations to exit the European Union.
The government has pledged to cut the rate of corporation tax from April this year to 19 per cent. This will be the lowest corporation tax in the G20, in addition, from 2020, it will fall again to 17 per cent.
The Budget addressed the concerns raised by businesses about the effects of the 2017 business rates revaluation, especially for those businesses coming out of Small Business Relief. Three measures amounting to a further £435 million cuts in business rates have been allocated to further support local business.
The Chancellor also acknowledged that there is work to be done in finding a better way of taxing the digital part of the economy.
International trade and export outlook
Economic growth remains relatively restrained in many key export markets, at this point it is still open to whether this will remain a prolonged slowdown. Given the uncertain markets, Britain will concentrate on resilience and securing stability to be open to export.
It is important to gain insights from other areas to understand how the economy is performing and what risks to take as a business. Considering consumer spending trends, it is clear that the economy is performing relatively well and that ecommerce cross-border opportunities remain valuable to SMEs.
The 2017 Budget also outlined plans to invest in Adult Social Care and the NHS over the next three years, loans and investment to support technical and Higher Education, as well as research placements, funding for organisations supporting women, funding for new free schools, and a new strategy to make the UK a world leader in 5G technology.
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