So, no more Spring Budgets. In one of the most surprising announcements in yesterday’s speech, the Chancellor revealed the abolition of the traditional March Budget and Autumn Statement. From 2017, there will be a single Budget in Autumn, along with a ‘Spring Statement’ with no major policy announcements from 2018.
In truth, the final Autumn Statement held few headline-grabbing stories. Many had been trailed in advance, including a ban on letting agent fees and a £1 billion boost for broadband connections and speed. Previous announcements also featured heavily, including an increase to the National Living Wage to £7.50 an hour and a crackdown on fraudulent whiplash claims.
Other key points were a freeze on fuel duty for the seventh year running, an increase in personal tax allowances, and a rise in the higher-rate income tax threshold from £43,001 to £45,000 in April and to £50,000 by 2020. There will also be a hike in free childcare for working families with three and four-year-olds from next September.
Meanwhile, the insurance industry was dismayed to learn of a rise in Insurance Premium Tax (IHT). The Telegraph reports that ‘insurers have hit out at plans to increase insurance premium tax for the third time in 18 months, a move that is expected to raise more than £4 billion for the Treasury’. The tax will increase from 10 per cent to 12 per cent next Summer and is expected to make insurance policies more expensive.
According to The Times, Philip Hammond also announced a ‘new £23 billion national productivity investment fund to address lack of investment in research and development and spur innovation in housing, rail and road and digital technology’.
And the Daily Mail reports that the future of the pensions triple lock is in doubt after the Chancellor ‘signalled a review of the costs of the guarantee’. The triple lock ensures that the state pension goes up every year by inflation, earnings growth or 2.5 per cent, whichever is the highest.
The paper also says that changes to salary sacrifice – when employees forgo part of their salary in exchange for benefits such as mobile phones, company cars and private medical insurance – will penalise workers. It said: ‘A shake-up means they could pay hundreds of pounds more in tax and national insurance to continue receiving the perks. Others could have their benefits scrapped altogether because companies can no longer afford to offer them.’
Also in his statement, the Chancellor defended post-Brexit economy forecasts. The Office for Budget Responsibility (OBR) forecast more government borrowing and reductions in economic growth after the referendum. The OBR estimated the Government would have to borrow £122 billion more than forecast in March’s Budget, with the referendum result accounting for £58.7 billion of this.
Black Friday
According to The Guardian, tomorrow’s Black Friday is likely to signal the final hurrah because retailers across the board are signalling that the weakness of sterling will push up prices in 2017. Meanwhile, a PricewaterhouseCoopers survey found that ‘shoppers planning to bargain hunt this weekend had earmarked an average spend of £203, with electricals and technology top of their lists. This year’s hot gadgets include bean-to-cup coffee machines and high-pressure steam irons.’
Meanwhile, new research from VoucherCodes.co.uk and the Centre for Retail Research suggests that Brits are set to splash an expected £5.8 billion over the next four days – an increase of 15 per cent on last year. Kicking off with Black Friday and finishing on Cyber Monday, the four days will see people hunting for deals in their millions across the UK – with 15 million searching for deals on Cyber Monday alone.
Consumer credit
Consumer credit is growing at its fastest rate since November 2006, according to the British Bankers Association.
According to the BBC, the BBA’s latest high street banking statistics show that while house purchase approval numbers were 10 per cent lower last month than in October 2015, consumer credit is now showing annual growth of more than 7 per cent.
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