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Spring statement: Philip Hammond to unveil improved growth and borrowing forecasts - business live Spring statement: Philip Hammond to unveil improved growth and borrowing forecasts - business live
(35 minutes later)
There’s less of a media presence outside the House of Commons today, compared to the full-blown budget. It may not be a full budget, but that’s not stopped painter Kaya Marr from his traditional appearance outside Downing Street, satirising our political leaders:
That’s reflects the fact we’re not expecting tax and spending changes today. Philip Hammond had been handed a curate’s egg by the Organisation for Economic Co-operation and Development this morning.
The OECD has raised its forecast for UK growth this year, but only to 1.3%. It then slows to 1.1% in 2019. That’s weaker than last November’s Budget forecasts (which could be revised up today).
In contrast, the global economy is expected to grow by 3.0% this year, with the eurozone expanding by 2.3%.
The OECD says Brexit uncertainty and falling real wages are hurting UK growth, saying:
“High inflation continues to damp real household income growth and consumer spending, and business investment is slowing, amidst continued uncertainty about the future relationship between the United Kingdom and the European Union,”
OECD tee up @hmtreasury spring statement with forecast showing 2018 UK growth of 1.3%, the lowest of all advanced countries. pic.twitter.com/mElvj4QVYK
Professor John Maloney, an economist from the University of Exeter, believes Philip Hammond could invest more in public services and infrastructure.
He explains:
“This is a good time to invest, with rates of interest so low, so it would make sense for the Chancellor to take the brakes off a bit. But, as he has says, there are still economic challenges, and at the most he is likely to have only up to £10bn extra to play with because of a recent increase in productivity.
He could use it to increase spending, but also to cut taxes or let the deficit shrink faster. He could also cancel any spending cuts or tax rises pencilled in for the future.”
Philip Hammond’s message to Britain today will be “the deficit is dead, long live the debt”, says Torsten Bell, the head of the Resolution Foundation thinktank.
In a blogpost, Bell explains how the elimination of the current budget deficit changes the landscape, but doesn’t end Britain’s problems.
He writes:
Let’s start with the dying bit. The chancellor will read out the obituary for the deficit that public finances data have written since the autumn. In short, improved tax receipts mean borrowing this year looks set to come in between £7 and £11bn lower than the £49.9bn projected by the Office for Budget Responsibility back in November.
The result is that the current budget deficit (excluding capital expenditure) disappeared on a 12-monthly basis at the end of last year. The thing that has, rightly or wrongly, dominated British economic debate this decade is no more.
But does that mean the chancellor will simply announce job done and that the public finances can retire from dominating our political economy? Far from it. Instead the central purpose of his speech tomorrow is almost certain to be kickstarting the debate that is likely to dominate fiscal policy for the next decade in the way the deficit has in the last – what is the level of public debt that Britain should be aiming for?
And as this chart shows, a fiscal shock such as the next recession would drive debt up again...
There’s less of a media presence outside the House of Commons today, compared with the full-blown budget.
That reflects the fact we’re not expecting tax and spending changes today.
Slimmed down Spring Statement, slimmed down College Green pic.twitter.com/LEJYJ8oXBISlimmed down Spring Statement, slimmed down College Green pic.twitter.com/LEJYJ8oXBI
Kirsty Blackman, the SNP’s spokesperson on the economy, says the chancellor needs to do more to help struggling families.Kirsty Blackman, the SNP’s spokesperson on the economy, says the chancellor needs to do more to help struggling families.
Speaking on Sky News, Blackman says:Speaking on Sky News, Blackman says:
We’ve still got one of the slowest growth rates in the G7. Things still look pretty bad.We’ve still got one of the slowest growth rates in the G7. Things still look pretty bad.
The uncertainty of Brexit means that inflation is going up (as the weaker pound makes imports pricier) while public sector pay is not keeping pace, she adds. The uncertainty of Brexit means inflation is going up (as the weaker pound makes imports pricier) while public sector pay is not keeping pace, she adds.
We can expect Hammond to highlight one recent milestone today -- UK tax receipts are now covering day-to-day spending. We can expect Hammond to highlight one recent milestone today – UK tax receipts are now covering day-to-day spending.
Ian Jones of Press Association has tweeted the details: Ian Jones of the Press Association has tweeted the details:
One piece of news Phillip Hammond will almost certainly trumpet today: the government's day-to-day budget is in the black for the first time since 2002. #SpringStatement pic.twitter.com/VICnltlVEc One piece of news Philip Hammond will almost certainly trumpet today: the government's day-to-day budget is in the black for the first time since 2002. #SpringStatement pic.twitter.com/v1BDUnzIOA
Shadow foreign secretary Emily Thornberry wants the chancellor to back plans for a £1.3bn tidal power lagoon in Swansea Bay, off the south coast of Wales. The shadow foreign secretary, Emily Thornberry, wants the chancellor to back plans for a £1.3bn tidal power lagoon in Swansea Bay, off the south coast of Wales.
In a video clip filmed during a trip to Wales, she says:In a video clip filmed during a trip to Wales, she says:
It’s about time we got some good news on the tidal lagoon.It’s about time we got some good news on the tidal lagoon.
Come on Philip Hammond, give them what they want. Come on Philip Hammond, give them what they want.”
If built, the scheme could generate enough electricity for 150,000 homes, and pave the way for similar green energy projects. However, the government has reportedly cooled about the idea. If built, the scheme could generate enough electricity for 150,000 homes, and pave the way for similar green energy projects. However, the government has reportedly cooled on the idea.
Shadow Foreign Secretary @EmilyThornberry says people in Swansea need a good news story and today's Spring Statement is a chance for @PhilipHammondUK to deliver one. #lovethelagoon pic.twitter.com/ZsDmKakvgEShadow Foreign Secretary @EmilyThornberry says people in Swansea need a good news story and today's Spring Statement is a chance for @PhilipHammondUK to deliver one. #lovethelagoon pic.twitter.com/ZsDmKakvgE
The spring statement is being overshadowed by the Salisbury nerve agent attack, after prime minister Theresa May told MPs yesterday that Russia was probably responsible. The spring statement is being overshadowed by the Salisbury nerve agent attack, after Theresa May told MPs yesterday that Russia was probably responsible.
Rex Tillerson, the US secretary of state, has strongly backed May this morning - that’s significant, as the White House declined to blame Russia yesterday. Moscow has until midnight to respond to the UK. Rex Tillerson, the US secretary of state, has strongly backed May this morning – that’s significant, as the White House declined to blame Russia yesterday. Moscow has until midnight to respond to the UK.
My colleague Andy Sparrow is tracking that story in his Politics Live blog; he’ll be along here later when Hammond’s speech begins.My colleague Andy Sparrow is tracking that story in his Politics Live blog; he’ll be along here later when Hammond’s speech begins.
Philip Hammond’s attempt to help younger travellers is backfiring his morning.Philip Hammond’s attempt to help younger travellers is backfiring his morning.
From today, 26-30 year olds can sign up to trial the new £30 ‘Millennial Railcard’, which offers one-third off rail journeys in the UK. Hammond announced it in last November’s budget, saying that 4.5 million people will benefit. From today, 26-30 year olds can sign up to trial the new £30 “millennial railcard”, which offers one-third off rail journeys in the UK. Hammond announced it in last November’s budget, saying 4.5 million people will benefit.
However, only 10,000 are being released today, prompting a digital scrum as people try to sign up. And, predictably, Railcard website is failing to cope with the rush, leaving people disappointed and unhappy. However, only 10,000 are being released today, prompting a digital scrum as people try to sign up. And, predictably, the railcard website is failing to cope with the rush, leaving people disappointed and unhappy.
Due to unprecedented demand our website is struggling. We'll keep you posted here as soon as we resolve the issues. We're really sorry this is happing and have our whole team on it.Due to unprecedented demand our website is struggling. We'll keep you posted here as soon as we resolve the issues. We're really sorry this is happing and have our whole team on it.
Given the demand for these when will there be another roll out without a restriction on numbers to the whole of the UK? Its unfair to wait when this is government backed to help younger people struggling with rail fare increases- I'll be 40 by the time I get one at this rate!Given the demand for these when will there be another roll out without a restriction on numbers to the whole of the UK? Its unfair to wait when this is government backed to help younger people struggling with rail fare increases- I'll be 40 by the time I get one at this rate!
Dictionary definition of unprecedented... You know how many 26-30 year olds there are in the UK right? 🤣 pic.twitter.com/mURGPTqXYrDictionary definition of unprecedented... You know how many 26-30 year olds there are in the UK right? 🤣 pic.twitter.com/mURGPTqXYr
Hannah Maundrell, Editor in Chief of money.co.uk, says the basic idea is sound: Hannah Maundrell, the editor in chief of money.co.uk, says the basic idea is sound:
“Travelling by train can be very expensive and for younger people whose pay packets are already stretched it can be a massive financial burden. After the price hikes to rail fares in January, a 26-30 rail card could ease some financial pressure from millennials, especially those who rely on trains on a daily basis. There are some restrictions however this should offer at least some relief to financially stretched commuters who are currently stung by sky high rail fares. Travelling by train can be very expensive and for younger people whose pay packets are already stretched it can be a massive financial burden. After the price hikes to rail fares in January, a 26-30 rail card could ease some financial pressure from millennials, especially those who rely on trains on a daily basis. There are some restrictions however this should offer at least some relief to financially stretched commuters who are currently stung by sky-high rail fares.
In other current affairs news (hoho), the opposition whips’ office has been plunged into darkness by a power cut: In other current affairs news (ho ho), the opposition whips’ office has been plunged into darkness by a power cut:
Big day in Parliament with the Spring Statement and votes on Free School Meals and Childcare later . . . and we have no electricity in the Whips offices. Prime suspects are Julian ‘dastardly’ Smith and his Whips 🤣 pic.twitter.com/neNUMnDMarBig day in Parliament with the Spring Statement and votes on Free School Meals and Childcare later . . . and we have no electricity in the Whips offices. Prime suspects are Julian ‘dastardly’ Smith and his Whips 🤣 pic.twitter.com/neNUMnDMar
Political blogger Guido Fawkes is providing support at this difficult time: The political blogger Guido Fawkes is providing support at this difficult time:
Power cut in parliament leaves @labourwhips in the dark.[INSERT WITTICISM HERE]Power cut in parliament leaves @labourwhips in the dark.[INSERT WITTICISM HERE]
One of the architects of the government’s welfare changes is urging Philip Hammond to put more money into universal credit, reversing recent cuts.One of the architects of the government’s welfare changes is urging Philip Hammond to put more money into universal credit, reversing recent cuts.
Iain Duncan Smith says working families need more help, as my colleague Anne Perkins explains:Iain Duncan Smith says working families need more help, as my colleague Anne Perkins explains:
The former work and pensions secretary Iain Duncan Smith has warned the chancellor that he risks undermining the whole purpose of welfare reform if he fails to reverse cuts to universal credit (UC) in his spring statement.The former work and pensions secretary Iain Duncan Smith has warned the chancellor that he risks undermining the whole purpose of welfare reform if he fails to reverse cuts to universal credit (UC) in his spring statement.
Philip Hammond is under mounting pressure from across the party to use better than expected tax revenues to reverse cuts made after the 2015 election. Research by the Joseph Rowntree Foundation shows that 340,000 people could be taken out of poverty by reversing the cuts to work allowances.Philip Hammond is under mounting pressure from across the party to use better than expected tax revenues to reverse cuts made after the 2015 election. Research by the Joseph Rowntree Foundation shows that 340,000 people could be taken out of poverty by reversing the cuts to work allowances.
‘I think he’s under a lot of pressure. There are a lot of colleagues around who would like to see the money restored to UC as a step in the right direction,” said Duncan Smith. “Hammond has got more money to spend. But will he? He says no … The answer to that is, we’ll see.” ‘I think he’s under a lot of pressure. There are a lot of colleagues around who would like to see the money restored to UC as a step in the right direction,’ said Duncan Smith. ‘Hammond has got more money to spend. But will he? He says no … The answer to that is, we’ll see.’”
Universal credit bundles a series of benefits unto a single payment; the scheme is struggling to hit the aim of making work pay more than welfare. Universal credit bundles a series of benefits into a single payment; the scheme is struggling to hit the aim of making work pay more than welfare.
The government are currently moving free school meals onto universal credit, meaning families earning less than 7,400 per year will qualify. Labour say this means one million children will miss out - they’ll try to block the move in a vote later today. The government is currently moving free school meals on to universal credit, meaning families earning less than £7,400 per year will qualify. Labour say this means 1 million children will miss out – they’ll try to block the move in a vote later today.
Today after the Spring Statement, MPs will vote on Govt plans to cut free school meals in England, abolish child care vouchers and remove free childcare. The Tories show their true colours again, removing working aged benefits whilst giving tax cuts to richest https://t.co/am6MXboeuoToday after the Spring Statement, MPs will vote on Govt plans to cut free school meals in England, abolish child care vouchers and remove free childcare. The Tories show their true colours again, removing working aged benefits whilst giving tax cuts to richest https://t.co/am6MXboeuo
Overnight, John McDonnell MP, Labour’s Shadow Chancellor, has challenged Philip Hammond to end the ‘misery’ caused by the government’s austerity programme. Overnight, John McDonnell, the shadow chancellor, has challenged Philip Hammond to end the ‘misery’ caused by the government’s austerity programme.
McDonnell said:McDonnell said:
“Today the Chancellor has a choice. He can choose to act and end the misery faced by many, or he can do nothing and continue to favour a privilege a few. Today the chancellor has a choice. He can choose to act and end the misery faced by many, or he can do nothing and continue to favour a privileged few.
“Our public services are at breaking point and many of our local councils are near bankruptcy. He needs to listen to the calls from across the political spectrum, including the Tory council leader in his own constituency - to end the financial crisis in our public sector. Our public services are at breaking point and many of our local councils are near bankruptcy. He needs to listen to the calls from across the political spectrum, including the Tory council leader in his own constituency, to end the financial crisis in our public sector.
“Philip Hammond must use today to act and end austerity. Our country cannot afford for him to continue to ignore the problems facing working households in our country. If his statement is one of boastful self-praise and not a recognition of the devastation faced by many in our country then he will have failed. Philip Hammond must use today to act and end austerity. Our country cannot afford for him to continue to ignore the problems facing working households in our country. If his statement is one of boastful self-praise and not a recognition of the devastation faced by many in our country then he will have failed.
“If the Chancellor refuses to act, then the next Labour government will end austerity and build a high wage, high skill economy for the many, not the few”. If the chancellor refuses to act, then the next Labour government will end austerity and build a high-wage, high-skill economy for the many, not the few.
Interestingly, the BBC’s Laura Kuenssberg reports that the cabinet has been discussing how to get more money into the NHS.Interestingly, the BBC’s Laura Kuenssberg reports that the cabinet has been discussing how to get more money into the NHS.
That could include ring-fencing anew tax increase specifically for healthcare (a ‘hypothecated’ tax). That could include ring-fencing a new tax increase specifically for healthcare (a ‘hypothecated’ tax).
She writes:She writes:
Several senior sources say that, at the end of January, the cabinet discussed ways of getting more money into the health service in the long term.Several senior sources say that, at the end of January, the cabinet discussed ways of getting more money into the health service in the long term.
That included the foreign secretary’s by now familiar argument about the hoped-for but disputed Brexit dividend.That included the foreign secretary’s by now familiar argument about the hoped-for but disputed Brexit dividend.
But more intriguingly for a Conservative government, I’m told that the cabinet discussed the possibility of tax rises to fund more spending for the NHS, even a hypothecated tax, as spelled out by senior MPs like Nick Boles.But more intriguingly for a Conservative government, I’m told that the cabinet discussed the possibility of tax rises to fund more spending for the NHS, even a hypothecated tax, as spelled out by senior MPs like Nick Boles.
However, we’re not expecting any NHS spending changes today.However, we’re not expecting any NHS spending changes today.
1. ‘Most of us accept something has to happen’ - could tax rises to pay for NHS be on the way? Cabinet has discussed how to find more cash for health, even tho today’s statement won’t open the cheque book - Have a read ... https://t.co/Kvbt5wgZ8a1. ‘Most of us accept something has to happen’ - could tax rises to pay for NHS be on the way? Cabinet has discussed how to find more cash for health, even tho today’s statement won’t open the cheque book - Have a read ... https://t.co/Kvbt5wgZ8a
2. No consensus yet, but there is growing acceptance at top of govt that NHS will need more cash, even tho there is caution about how and when2. No consensus yet, but there is growing acceptance at top of govt that NHS will need more cash, even tho there is caution about how and when
3. Spring statement today tho won’t be moment for any splurge tho - Labour and the Tories hoping for extra cash for public services won’t get their way way3. Spring statement today tho won’t be moment for any splurge tho - Labour and the Tories hoping for extra cash for public services won’t get their way way
4. Hammond will stick to need for ‘balanced’ spending - code for keeping tight lid on public spending while govt sorts out the debt4. Hammond will stick to need for ‘balanced’ spending - code for keeping tight lid on public spending while govt sorts out the debt
Our economics editor Larry Elliott has identified the five key things to watch out for in today’s spring statement. Our economics editor, Larry Elliott, has identified the five key things to watch out for in today’s spring statement.
That includes slightly improved growth forecasts, as Larry explains:That includes slightly improved growth forecasts, as Larry explains:
Hammond is likely to say that the outlook for growth is marginally better than it was three months ago. In November, the OBR said it was expecting the economy to expand by 1.5% in 2017 and by 1.4% in 2018. The latest official figures from the Office for National Statistics show that growth was actually 1.7% in 2017 and the consensus among City, business and academic economists is that something similar is likely in 2018.Hammond is likely to say that the outlook for growth is marginally better than it was three months ago. In November, the OBR said it was expecting the economy to expand by 1.5% in 2017 and by 1.4% in 2018. The latest official figures from the Office for National Statistics show that growth was actually 1.7% in 2017 and the consensus among City, business and academic economists is that something similar is likely in 2018.
In the past, chancellors have used their statements to boast about the UK outperforming other economies, but that won’t happen on this occasion given that Britain grew more slowly all the other G7 countries in 2017 bar Italy. In the past, chancellors have used their statements to boast about the UK outperforming other economies, but that won’t happen on this occasion given that Britain grew more slowly than all the other G7 countries in 2017 bar Italy.
Copies of the spring statement have arrived at Downing Street this morning:Copies of the spring statement have arrived at Downing Street this morning:
Copies of the Spring Statement just arrived at The Chancellors gaff one imagines for his approval with only hours to go! 📸 pic.twitter.com/VRyzLwPPmkCopies of the Spring Statement just arrived at The Chancellors gaff one imagines for his approval with only hours to go! 📸 pic.twitter.com/VRyzLwPPmk
Philip Hammond is also likely to launch several consultations today, which could lead to reforms and policy changes in the autumn budget.Philip Hammond is also likely to launch several consultations today, which could lead to reforms and policy changes in the autumn budget.
This could include an examination into how the tax system can be used to tackle the growing problem of plastic waste. This could build on the existing 5p levy on plastic bags.This could include an examination into how the tax system can be used to tackle the growing problem of plastic waste. This could build on the existing 5p levy on plastic bags.
Other areas include the taxation of the UK’s digital economy, tax simplification, artificial intelligence (AI) and the VAT system faced by small businesses.Other areas include the taxation of the UK’s digital economy, tax simplification, artificial intelligence (AI) and the VAT system faced by small businesses.
Good morning. Philip Hammond is about to create a little bit of history, when he unveils the UK’s first ever spring statement.Good morning. Philip Hammond is about to create a little bit of history, when he unveils the UK’s first ever spring statement.
But in truth, today’s statement will be as notable for what’s not in it -- we’re not expecting any tax and spending changes, and the whole speech could be over in 20 minutes or so. But in truth, today’s statement will be as notable for what’s not in it – we’re not expecting any tax and spending changes, and the whole speech could be over in 20 minutes or so.
That’s because the chancellor of the exchequer, having moved the budget to the autumn, is determined to only have one fiscal event this year.That’s because the chancellor of the exchequer, having moved the budget to the autumn, is determined to only have one fiscal event this year.
So without any fiscal fireworks, Hammond will be focusing on an upbeat assessment of the state of the British economy today.So without any fiscal fireworks, Hammond will be focusing on an upbeat assessment of the state of the British economy today.
He’s expected to reveal that the UK economy could grow a little faster than expected this year, while borrowing is undershooting forecasts thanks to strong tax receipts.He’s expected to reveal that the UK economy could grow a little faster than expected this year, while borrowing is undershooting forecasts thanks to strong tax receipts.
City experts predict that borrowing this financial year could be revised down by £7bn, to £43bn, while next year’s could be trimmed from £40bn to £34bn.City experts predict that borrowing this financial year could be revised down by £7bn, to £43bn, while next year’s could be trimmed from £40bn to £34bn.
The forecast for economic growth this year is expected to be increased, from the lacklustre 1.4% forecast in November.The forecast for economic growth this year is expected to be increased, from the lacklustre 1.4% forecast in November.
Hammond can also boast that, for the first time since the financial crisis, Britain is bringing in enough tax to cover day-to-day spending.Hammond can also boast that, for the first time since the financial crisis, Britain is bringing in enough tax to cover day-to-day spending.
There are many places in the UK crying out for more investment — from the NHS and schools to transport infrastructure and the military. The chancellor, though, is expected to resist calls to ease austerity, and keep any extra fiscal powder dry until autumn’s Budget. There are many places in the UK crying out for more investment – from the NHS and schools to transport infrastructure and the military. The chancellor, though, is expected to resist calls to ease austerity, and keep any extra fiscal powder dry until autumn’s budget.
As Hammond put it on Sunday:As Hammond put it on Sunday:
“There is light at the end of the tunnel, because what we’re about to see is debt starting to fall, after it’s been growing for 17 continuous years. That’s a very important moment for us. There is light at the end of the tunnel, because what we’re about to see is debt starting to fall, after it’s been growing for 17 continuous years. That’s a very important moment for us.
“But we are still in the tunnel at the moment.“But we are still in the tunnel at the moment.
We have to get debt down. We’ve got all sorts of other things we want to do. We’ve taken a balanced approach over the last couple of fiscal events, using the flexibility we had to continue paying down debt but also to provide additional support to our public service. We have to get debt down. We’ve got all sorts of other things we want to do. We’ve taken a balanced approach over the last couple of fiscal events, using the flexibility we had to continue paying down debt but also to provide additional support to our public service.”
He’s also tweeted a colourful explanation of what to expect:He’s also tweeted a colourful explanation of what to expect:
Next week I'll be delivering my Spring Statement and providing an update on the UK economy. Here's what the Spring Statement is all about.pic.twitter.com/AqlBsx7FOcNext week I'll be delivering my Spring Statement and providing an update on the UK economy. Here's what the Spring Statement is all about.pic.twitter.com/AqlBsx7FOc
After Hammond sits down Britain’s fiscal watchdog, the Office for Budget Responsibility, will give its verdict on the chancellor’s plans and the state of the UK economy.After Hammond sits down Britain’s fiscal watchdog, the Office for Budget Responsibility, will give its verdict on the chancellor’s plans and the state of the UK economy.
Importantly, the OBR is also expected to release its estimate of the cost of Brexit, including a forecast of yearly payments from the UK to the EU. That could end up being the big story of the day.... Importantly, the OBR is also expected to release its estimate of the cost of Brexit, including a forecast of yearly payments from the UK to the EU. That could end up being the big story of the day...
Here’s the agenda:Here’s the agenda:
12.30pm GMT: Chancellor of the Exchequer Philip Hammond delivers the spring statement12.30pm GMT: Chancellor of the Exchequer Philip Hammond delivers the spring statement
1pm (estimated) GMT: Office for Budget Responsibility releases its latest Economic and Fiscal Outlook1pm (estimated) GMT: Office for Budget Responsibility releases its latest Economic and Fiscal Outlook
3pm GMT: Office for Budget Responsibility press conference3pm GMT: Office for Budget Responsibility press conference