Yesterday, the Chancellor of the Exchequer Phillip Hammond presented his Spring Statement to the House of Commons. And while short, lasting less than 30 minutes, many vital points were addressed, including those that affect the business community directly.
No major financial plans, such as tax changes were, or will ever be, covered by the Spring Statement. This is intentional, as the Spring Statement acts as a platform to provide an update on the UK’s economic health, and enables the government to respond to the Office for Budget Responsibility (OBR) twice a year. The UK’s major fiscal forecast will occur later in the year, in the form of the Autumn Budget.
Read more about the key takeaways from Hammond’s 2019 Spring Statement below.
As feared, growth is down this year from 1.6% to 1.2%. However, it’s not all bad news. The forecast for 2020 to 2023 looks positive, with predictions as follows:
- 2019: 1.2%
- 2020: 1.4%
- 2021: 1.6%
- 2022: 1.6%
- 2023: 1.6%
The UK’s economy has also seen nine consecutive years of growth, growing faster than any of the G7, a group of the world’s seven most powerful industrialised countries. Over 600,000 new jobs were promised by 2023, significantly boosting the UK’s workforce. Wages are set to increase at least 3% each year too, after being revised by the OBR. This rate is the fastest in a decade.
Delivered just after Theresa May’s Brexit deal had been rejected by MPs for a second time, uncertainty was an underlying theme during this year’s statement. The premise of a no-deal Brexit cast a cloud over the entire Spring Statement, and the UK’s current economical stance as a whole.
Philip Hammond used this an opportunity to warn against a no-deal Brexit, which will be decided this evening. He reminded MPs of the chaos that would occur if a “smooth and orderly” exit from the EU cannot be achieved, revealing a full three-year spending review would be released before the summer recess if a deal was agreed.
Hammond’s Brexit fiscal war chest (the amount of money set aside to deal with the impact of Brexit) has also grown significantly since the Autumn Budget. Perhaps the biggest stat of the entire statement, the Chancellor said he now has £26.6 billion spare to fuel the UK’s exit from the EU. More money will be funnelled into public spending, according to Hammond, if a Brexit deal is agreed.
Investment in scientific research
Announcing a £200 million investment into science and technology sectors towards cutting-edge research. The Government has made its position clear to help the UK maintain and strengthen its position as a technological innovator even when the country leaves the EU.
Where’s all the money going?
£81 million will be given to a brand-new Extreme Photonics Centre in Oxford to develop state-of-the-art laser technology, £45 million has been given to the European Bioinformatics Institute in Cambridge for genomics research, while a further £79 million will be sent to the University of Edinburgh to develop Archer 2 – a new “super computer” five times faster than that currently used in the UK. This high-speed computer will be used across a number of research-based programmes, aiding medical, aerospace and climate science developments. Archer 2 will help the UK with its current breakthroughs in targeted treatments for arthritis and HIV too.
Without too much being specifically said on Research and Development, which may be news in itself, the Spring Statement holds great promise with the Government reconfirming its target to spend 2.4% GDP on R&D by 2027. Supported by the £3 billion a year R&D Tax Credits system, there are even more opportunities for companies to benefit.Mike Price, Director at MPA Group
Global tech giants under review
In light of an independent review conducted by Jason Furman, Barack Obama’s chief economic adviser, Hammond has promised action will be taken against the power held by global tech giants like Google, Facebook and Microsoft to increase consumer choice and control.
The UK leads the world in embracing technology and the opportunities it delivers for people. Competition is fundamental to ensuring the market works in the interest of consumers, but we know some tech giants are still accumulating too much power, preventing smaller businesses from entering the market.Phillip Hammond, chancellor of the exchequer
This means individuals, in the future, should have more control over their personal data, more freedom when it comes to switching between platforms and more options when it comes to deciding on a platform or app itself.
Caring for the environment
The Spring Statement included a promise to help small businesses reduce their energy bills and carbon emissions, in the form of a new energy efficiency scheme. Another encouraging sign that the government are taking home-grown small businesses under their wing.
It was also revealed that £3 billion will be available in funding to create 30,000 new affordable homes, and a “future homes standard” will be established, ending fossil-fuel heating systems in new homes for good by 2025.
“Despite the uncertainty of Brexit currently overshadowing the economy, the Spring Statement highlights that the UK is determined to invest in innovation and technology while caring for SMEs. Whatever happens when the UK leaves the EU, our R&D Tax Credit scheme will be here to support companies determined to develop and grow.”Mike Price, Director at MPA Group
If you would like to know how we can help you fund your innovation please get in touch today and speak to one of our expert advisors.