Last updated: May 3rd, 2017 at 09:55 pm
UK Chancellor of the Exchequor Phillip Hammond (ie. the UK finance minister) has announced his Autumn Statement in which he lays out growth and borrowing expectations, a few spending plans and taxation changes. Below is a brief breakdown and a few comments.
Weaker growth and weaker tax revenues means more borrowing.
Still in the red at the end of this Parliament,which is a change from George Osborne’s balanced budget target.
Borrowing is back, and more fiscal spending is replacing a far more austere approach of the Cameron/Osborne regime.
This is still quite optimistic for the OBR.
Dropped for the next two years but importantly kept the same from 2019 onwards.
New target for debt to be falling as a share of GDP by the end of the Parliament.
However economists argue that as long as growth is positive, having debt falling as a proportion of debt/GDP is a sustainable position to be in.
A new “market leading investment product” from the NS&I A
One Budget per year is positive
Gives better certainty, less tinkering, and less politicising.
Also the timing of the Autumn Budget means more time to plan for the new tax year in April – better for businesses.
IMPACT ON POUND
The initial market impact has been somewhat neutral (which is possibly quite positive given the renewed dollar strength today). However the general reaction could be considered to be mildly negative due to the increase in debt and borrowing, although this was largely expected.
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