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Regular Industry Development Updates, Opinions and Talking Points relating to Manufacturing, the Supply Chain and Logistics.

Spring Statement Summary – The Good, The Bad And The Ugly

14-Mar-2018
Philip Hammond (pictured)
Chancellor of the Exchequer, United Kingdom
Spring Statement Summary – The Good, The Bad And The Ugly
UK Chancellor of the Exchequer, Philip Hammond, began his speech in a political vein, by calling the Labour ‘naysayers’ “Eeyores” and declaring he is at his “most Tiggerish”. This positive stance towards the economy is what markets had largely been expecting.

Little was said about Brexit, other than that the government has “made substantial progress in our negotiations with the EU to deliver a Brexit that supports British jobs…”

The good – better economic performance, help for squeezed consumers, increased employment and a strong British manufacturing sector

Economy in decent shape
As expected, the Chancellor announced that the UK economy is doing better than we thought, having grown each year for the past eight years, and with the borrowing forecast from the Office for Budget Responsibility (OBR) dropping from £49.9 billion to £45.2 billion for 2017/18; although this was not as large a drop as was anticipated.

The OBR has revised their GDP forecast to 1.5% from 1.4%, keeping forecasts for 2019 and 2020 the same. However, their forecasts for 2021 of 1.4% and 1.5% for 2022 are lower than those released in November 2017, at 1.5% and 1.6% respectively. Inflation is expected to get back on target by 2019, predicted to fall to 2% by the end of 2018. Employment growth us forecasts to increase every year during this Parliament and Mr. Hammond announced that the government is raising the National Living Wage.

Protecting pockets
Mindful of squeezed UK taxpayers, he also announced that they would be freezing fuel duty, and have already lowered taxes, in addition to approximately 60,000 homes that were eligible for and benefitted from the Stamp Duty relief announced in the Autumn Budget.

Supporting innovation and industry
Echoing discussions in our manufacturing panel debate this morning, the Chancellor praised the UK’s successful manufacturing sector, which has enjoyed “its longest run of growth for 50 years…” and added three million jobs to the UK economy. Mr. Hammond said that we must embrace new technologies of the future, support our inventors and innovators.

The bad – late payments
SMEs are suffering from late payments, described by Mr Hammond as a “scourge”. The Chancellor said that the government needs to look at ways they can help small businesses to improve this situation and champion entrepreneurs.

The ugly – plastic pollution
Every year, the UK produces millions of tonnes of single-use plastic waste – not a pretty picture… In a welcome move to follow from the last Budget and growing concerns about plastics pollution, the Chancellor has called for evidence to tackle single-use plastic waste. The government will be looking in to ways they can adapt the tax system to discourage single-use plastic and decrease damage to the environment. Funding from existing research budgets of £20 million will also go to academic institutions and businesses to find ways to reduce the impact of plastic consumption.

David Johnson, founding director of currency specialist, Halo Financial, commented, “The announcements made in today’s speech were broadly in line with what we were expecting, with an upbeat tone that will be welcomed by currency markets, although recent events across the Pond are also likely to have an effect on the strength of the Pound against the US Dollar and the trend is an upward one in the GBPUSD exchange rate.

“It’s encouraging to see that the success of the UK manufacturing industry is being recognised and that steps are being taken to encourage entrepreneurship and innovation, to support our small businesses and help improve personal finances, as well as tackling fundamental environmental issues.

“On the other side of the coin, we did not hear much about plans for Brexit; anything about the so-called “tech tax”; or any indication of additional support/government measures relating to public services, which may prolong uncertainty for many UK workers.”

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