British chancellor Philip Hammond has delivered an upbeat message over the health of the UK economy, while committing a further £3 billion (US$3.96 billion) towards Brexit preparations.
In his speech on Wednesday, November 22, Britain’s top financier said the UK economy “continues to grow, continues to create more jobs than ever before, and continues to confound those who seek to talk it down.”
With the UK now preparing for a future outside the EU, the government will “express its resolve to look forwards not backwards.”
Insisting the budget is about “much more than Brexit,” Mr. Hammond said he believes the world is “on the brink of a technological revolution” and he plans to invest to keep Britain at the forefront of it.
Referring to it briefly, however, the chancellor says the UK is working “to achieve a deep and special partnership” with Europe, but had to ensure the country is reading for every outcome from the Brexit negotiations.
Brexit Extra Money
Setting aside another £3 billion over the next two years, he added, this would be in addition to the £700 million (US$926.5 million) already invested in preparations.
“No-one should doubt our resolve,” Mr. Hammond said.
Showing an uncharacteristic side, the chancellor joked that he would be sticking to drinking water rather than anything stronger, while he also had a dig at the prime minister Theresa May’s ill-fated conference speech by showing off a packet of cough sweets saying: “just in case.”
Slowdown in Growth
Despite his optimism over the UK economy, the Office for Budget Responsibility has cut its forecasts on Britain’s economic growth, which he said would be 1.5 percent in 2017, a downgrade from the 2 percent forecast made in March. Growth has also been cut to 1.4 percent in 2018, and 1.3 percent in both 2019 and 2020, before picking up again.
Mr. Hammond said the OBR has confirmed that the UK is still on track to meet the government’s fiscal rules, with borrowing forecast to be £49.9 billion (US$66.1 billion) — some £8.4 billion (US$11.1 billion) lower than forecast at the spring budget. This trend will continue in the coming years eventually reaching its lowest level in 20 years during 2022-23.
The chancellor has also vowed to extend the national productivity investment fund to upgrade the UK’s economic infrastructure. “We are allocating a further £2.3 billion (US$3.04 billion) for investment in R&D [research and development] and we’ll increase the main R&D tax credit to 12 percent,” he explained.
Oil and Gas Deal
Outlining a tax break for transfers of North Sea oil and gas fields, the chancellor said it will encourage new entrants to bring fresh investment to a basin that still holds up to 20 billion barrels of oil.”
Showing his green credentials, Mr. Hammond said there would be extra funds and tax incentives for electric car drivers. This includes a new £400 million (US$53 million) on charging infrastructure fund, an extra £100 million (US$132 million) in plug-in-car grant and £40 million (US$53 million) for research into charging.
“I know Jeremy Clarkson doesn’t like them, but there are many other good reasons to pursue this technology so today we step up our support for it. Sorry Jeremy, not the first time you’ve been snubbed by Hammond and May,” he joked.
Tobacco Tax to Go Up
Always a target in most budgets, Mr. Hammond has again hit smokers in the pocket, announce tobacco tax will rise at inflation, plus two percent.
This could see the cost of cigarettes rise by around six percent.
Alcohol Duty Frozen
Duty will also rise on “cheap, high strength, low quality products — especially so-called white ciders.” Other ciders, wines, spirits and on beer will be frozen, however.
Living Wage Increase
There will also be rises to the national living wage from April, increasing from £7.50 (US$9.95) an hour to £7.83 (US$10.39) — giving full-time workers a further £600 (US$795) pay increases.
Stamp Duty Abolished
To help the housing market, the chancellor has abolished stamp duty for all first time buyers on properties up to £300,000 (US$397,000) while also committing £44 billion (US$53 billion) on housing capital funding, loans and guarantees.
Help For Rough Sleepers
Mr. Hammond has also promised action on rough sleepers, insisting it is “unacceptable that in 21st century Britain there are people sleeping on the streets.”
Local authorities will now have the power to charge a 100 percent council tax premium on empty properties, he said, adding the government will establish a homelessness taskforce in a bid to have rough sleeping by 2022 and eliminate it by 2027.
Royalties to Tax Havens
In the wake of the Paradise Papers leak, the chancellor says HM Revenue and Customs (HMRC) will start to charge more tax of royalties relating to UK sales when those royalties are paid to a low tax jurisdiction, this will raise around £200 million (US$265 million).
“This does not solve the problem… but it does send a signal of our determination,” he said.