Today, 13th March 2019 Chancellor Philip Hammond presented the 2019 Spring Statement. The Spring Statement is the Chancellor’s yearly brief update on the state of the economy. It is paralleled by the Autumn Budget, which is a longer and more in-depth announcement setting out the policies for government spending.
What’s the importance of the Spring Statement?
There aren’t any significant announcements on spending and taxation in the Spring Statement – so what’s the importance of it? With the shadow of Brexit looming, why do we need to pay attention to the Spring Statement?
The government is legally required to provide the public with an economic health check and update on public finances twice a year (one Autumn Budget, one Spring Statement); it’s more or less tradition.
If anything, it gives the public a glimpse at the next Autumn Budget – which tends to bring about pieces of legislation that affect contractors, freelancers and the general taxpayer. Although, with no firm Brexit deal yet in place there is still plenty of uncertainty to go around.
What happened in the Spring Statement 2019?
The Chancellor delivered the Spring Statement to the House of Commons on Tuesday, 13th March at 12:30 pm. Key points made include:
- Despite Hammond saying that the economy has ‘defied expectations’, economic growth was revised down by 0.4% from October 2018 to 1.2% for 2019. It is forecast to be 1.4% in 2020, then 1.6% in 2021 and the following two years.
- Forecast for borrowing is £3 billion lower than forecast at the Autumn Budget. Hammond also said that so long as a Brexit deal is pushed through and Labour do not come into power, the UK will have sustainable choices for its future.
- The Chancellor warned that a no-deal Brexit would reduce the productivity of the economy in the short and medium-term, as well as result in higher prices for consumers.
- Philip Hammond has said he wants to deliver a digital economy that “works for everyone”, and make tech companies pay their fair share whilst protecting consumers from harm.
- From June 2019, the use of paper landing cards at UK points of entry will be phased out for countries such as the USA, Australia, Canada, South Korea and Japan.
- A £3 billion fund will help deliver 30,000 affordable homes in the UK.
Is austerity ending?
The squeeze on budgets and spending isn’t expected to end anytime soon. Extra funds may be required in the event of a no-deal Brexit – which will be voted on by MPs this evening.
It has been confirmed that austerity will not be ending just yet. However a full spending review is scheduled for summer 2019 to revisit this, and to also provide the framework for spending opportunities from 2020 onwards. This is fully dependent on the outcome of Brexit negotiations.
What about the 2019 Loan Charge?
Groups including the Loan Charge All-Party Parliamentary Group (Loan Charge APPG) and the Loan Charge Action Group have been calling for a delay to the 2019 Loan Charge.
It appears there will be no imminent delay on the implementation of the Loan Charge on 6th April 2019.
HMRC will be writing a report on the loan charge setting out its rationale for the charge and its assessed impacts. The report is set to be published by 30th March 2019 – with the charge being implemented just seven days later.
Read more about the Loan Charge, which is affecting many contractors who used disguised remuneration loan schemes from April 1999, and whose loans are still outstanding.
Closing comments at the Spring Statement
Chancellor Philip Hammond stressed the importance of a Brexit deal, and his strong belief that an agreement will be reached. He cautioned parliament that building a stronger country was only possible by avoiding a no-deal scenario.
Further information on government spending and budgets will be laid out in the Autumn Budget 2019, which can be expected around October or November.
Learn about off-payroll in the private sector, which wasn’t discussed at this Spring Statement.