Economic forecast:
- The Office for Budget Responsibility (OBR) expects growth to be resilient:
- 2019 growth forecast is being revised up from 1.3% to 1.6%
- 2020 growth forecast at 1.4%
- 2021 growth forecast at 1.4%
- 2022 growth forecast at 1.5%
- 2023 growth forecast at 1.6%
- Since 2010, there have been 3.3 million more people in employment and it is predicted there will be 800,000 more jobs by 2023.
- Wage growth is at 3.1%, the strongest it has been in a decade. The OBR forecasts sustainable wage growth in the next five years.
- From April 2019:
- The personal allowance threshold is to rise from £11,850 to £12,500
- The higher rate income tax threshold is to rise from £46,350 to £50,000
- National Living Wage increasing by 4.9%, from £7.83 to £8.21 an hour
Business support and productivity
Chancellor Philip Hammond expressed “Britain can solve the productivity challenge if we prepare for and embrace technological change ahead.” The following initiatives were delivered during the budget:
- £150 million funding to attract talent from around the world so British scientific research can continue to lead the world.
- An increase in the Annual Investment Allowance from £200,000 to £1 million for two years from January 2019 – delivering on a ‘long standing ask’ from the British Chambers of Commerce (BCC).
- The support of 10,000 entrepreneurs by extending start up loans funding to 2021, extending the New Enterprise Allowance based on calls from the Federation of Small Business (FSB) to provide mentoring and support to benefit claimants to get their business ideas off the ground.
- Access to the Financial Ombudsman will be extended to support larger SMEs.
- As well as backing businesses to invest and grow, making sure British workers have the skills they need to thrive and prosper is a priority. This will include the introduction of a new system of T-level vocational training and £100 million additional funding for the national retraining scheme.
- The contribution smaller firms make to the apprenticeship levy will be halved from 10% to 5%.
- Entrepreneur’s relief will be retained, extending the minimum qualifying period from 12 months to two years to ensure it goes to genuine entrepreneurs.
- To support British exports, the UK Export Finance (UKEF) direct lending facility will be increased by £2 billion to help more businesses export.
- The government wants Britain to remain the best place to start and scale up a tech business – a 2% UK digital services tax will be introduced in April 2020 for technology giants that are profitable and generate £500 million a year in global revenue, helping raise £400 million a year.
- Technological change brings challenges as well as opportunities. High streets are under pressure due to the uptake of online shopping, it is important that high streets remain the centre of our community.
- £900 million in business rates relief for small businesses and £675 million ‘Future High Streets Fund’ to rejuvenate the high streets.
- For the next two years, business rates will be cut for businesses with a rateable value of £51,000 by a third. This will result in a £8,000 annual saving for 90% of independent shops, pubs, restaurants and cafes.
- The targeting of the Employment Allowance will help small businesses to increase staff hours, improve pay and meet the rising costs of the National Living Wage, boosting jobs and productivity.
- Investment of up to £5 million for local areas to develop proposals for University Enterprise Zones will promote collaboration between universities and business.
There will be a full spending review next year, setting out priorities for public spending, deciding on the right balance between investing in Britain’s future and current consumption of public services.