Equity Research; UK Budget

UK Budget seen as Neutral

The UK Chancellor Phillip Hammond has delivered a relatively neutral Budget with the claim that “Austerity is coming to an end” a rather different message to PM Theresa May who claimed “austerity had ended”.

The UK government has forecast GDP growth of 1.6% in 2019, declining to 1.4% in 2020 and 1.4% in 2021 alongside a budget deficit (public sector borrowing requirement) of £31.8bn in 2019-2020, £26.7bn in 2020-2021 and £23.8bn in 2021-2022.

A number of specific items have been agreed:-

1. £1bn for the UK Ministry of Defence for cyber threats.
2. £400m bonus for schools
3. £420m for local Highways Authorities for fixing potholes
4. £650m for local authority social care for elderly people
5. Increased funding of £500m for the Housing Infrastructure Fund
6. £2.4bn for Transforming Cities Fund
7. UK Digital Services Tax (to be introduced in April 2020) on “established tech giants” with a turnover over £500m
8. £950m for the Scottish government, £550m for the Welsh government and £320m for Northern Ireland government
9. Tax on imported plastic packages and disposable plastic cups that is 30% recyclable or less
10. Freeze in fuel duties and on beer, cider and spirits
11. Tobacco duties to rise in line with inflation +2%
12. Universal Credit allowances increased by £1,000
13. Personal allowance of £12,500 and £50,000 higher rate threshold from April 2019 a year before the manifesto pledge in April 2020.

Overall conclusion

A rather average “mid-term” budget with some innovative measures, helping local governments, schools and environmental measures.