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“Just about managing” is a new acronym used to describe low/ middle income families struggling to make ends meet. The term has taken on a significance post the “Brexit” vote on June 23rd that led to a change of government.
“An economy that works for everyone” means tackling the UK’s productivity gap, and dealing with the UK’s imbalances. Philip Hammond wants to support the UK using fiscal stimulus over the “near term”. This means no more welfare related measures in the short term hence the JAMs are not facing further cuts to welfare.
The “productivity gap” ie the longer working hours/ lower pay is a key focus for Hammond as a means of delivering improved living standards. A £23bn new National Productivity Investment Fund will invest in the UK’s future over the next five years.
The commitment to a balanced budget in 2019/2020 has gone and replaced with a commitment to a balanced budget in the next Parliament. In the interim cyclically adjusted borrowing should be below 2% (PSBR). The Chancellor expects a budget deficit of £68bn in 2016/7 falling to £17.2bn in 2021/2.
As a percentage of GDP, the Chancellor expects 2016/7 to see debt to GDP to peak at 82.4% (after adjusting for Bank of England’s holdings of UK debt) before declining to 72.7% in 2021/2.
The OBR forecasts 2.1% GDP growth in 2016, declining to 1.4% in 2017, 1.7% in 2018, 2.1% in 2019 and 2020 and 2% in 2021.
The Chancellor’s maiden budget autumn statement has introduced a ban on letting fees (the £200-£400 charges triggered when a tenancy agreement and fixtures/ fittings list is produced). Shares in estate agencies, Countrywide, Foxtons, LSL Properties and Savills are lower in response. Typically these companies generate about half of their income from lettings of which around 10% is linked to letting fees.
£23bn new “National Productivity Fund”
The national living wage will increase from £7.20 to £7.50 an hour from April 2017 – a 4.2% increase and ahead of consumer price inflation.
Insurance Premium Tax to rise to 12% from 10% from April 2017
£1.4bn for 40,000 new affordable homes
£1.1bn local transport network investment
Cancelling fuel duty rise for 2017
Corporation tax to drop to 17% from current levels of 20% (timetable unclear).
Personal tax allowance to rise to £11,500 in 2017
£5bn to be raised from anti-tax avoidance measures by large multi-nationals
To investigate UK energy consumer markets
New investment bond paying 2.2% up to £3000
Abolition of the Autumn Statement with one Budget pa
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