Hazlewoods Budget reflections
PUBLISHED: 13:39 02 November 2018 | UPDATED: 14:01 05 November 2018
On behalf of Hazlewoods, the Gloucestershire-based firm of business advisers and chartered accountants, Ruth Dooley shares her thoughts following the Budget
I had felt sorry for the Chancellor on the approach to the Budget he delivered last Monday. He had been dealt a double whammy by Theresa May. Firstly, there was the promised ‘end to austerity’ and, secondly, she had committed to funding the NHS to the tune of £84 billion over the next six years. This did not exactly leave a lot of room for manoeuvre.
Luckily for Mr Hammond the latest number from the Office of Budget Responsibility (OBR) showed that the position in respect of future borrowing was £68 billion better than had previously been forecast, due to slightly better growth forecasts and higher tax receipts. He therefore decided to take full advantage of this and spent it all (and more) with something for everyone.
In addition to the monies for the NHS he committed £1.9 billion to Universal Credit, £6 billion to the National Productivity Investment Fund, £1 billion to Defence as well as providing further funds for housing, schools and potholes. The total extra budgeted expenditure over the next six years is £103 billion.
Not surprisingly then, it was a popular Budget. According to a YouGov poll for The Times, 44% of voters thought the Budget was fair and 14% considered it unfair. 22% thought it would make Britain better off compared to 13% who thought the country would be worse off. 44% thought it would make no difference.
The Institute for Fiscal Studies, however, have said that in their view the Budget stands a one in three chance of failing. Due to this Budget, the Government is expecting to have to borrow an extra £20 billion in six years’ time. If the figures from the OBR are revised downwards, the Chancellor will be forced to borrow even more to finance the promises made. With nothing in reserve and an unbalanced budget, the Chancellor seems to have abandoned his goal of eliminating the budget deficit by the middle of the next parliament.
All of this will, however, be academic if no deal is reached on Brexit. In this event a further budget has been promised by the Chancellor as a huge amount of rethinking will need to be done.
I may have felt sorry for the Chancellor before the Budget, but now my sympathies are solely with that abandoned lady, Prudence.
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