Once again, Chancellor Philip Hammond has demonstrated his commitment to the principle of the Spring Statement as a low-key event, at least in terms of tax and public spending announcements.
With none of the pomp and circumstance of the Autumn Budget, Hammond stuck in large part to summarising key points from the updated economic forecast from the Office for Budget Responsibility (OBR). Though he presented the numbers with a flourish, the OBR was mildly pessimistic in its own presentation, especially around a reduced estimate for growth in 2019, down from 1.6% to 1.2%.
In political terms, however, the real substance of the speech was – like seemingly everything else in 2019 – focused on Brexit. Landing the day after the second ‘meaningful vote’ on Prime Minister Theresa May’s proposal for the terms of the UK’s exit from the EU (defeated only slightly less comprehensively than in January), and only a few hours before a follow-up vote on whether to leave with no deal (no-deal was rejected by only four votes), this was perhaps inevitable.
The Chancellor used his 35-minute speech to hammer home the likely economic impact of leaving the EU without a deal – “significant disruption in the short and medium-term and a smaller, less prosperous economy in the long-term”.
He also took the opportunity to reiterate that planned investment in public services – schools, hospitals, infrastructure – was on the assumption of an orderly exit from the EU, and that it would be back to the drawing board otherwise.
The Chancellor stopped short of firming up plans for a ‘full fiscal event’ (that is, an emergency Budget) in the summer in the event that no deal is reached, and instead confirmed the launch of a full three-year spending review, to feed into the scheduled Autumn Budget.
In its own way, the speech was quietly pointed: wouldn’t it be nice to continue on this straight and straightforward path, with few surprises or shocks? Wouldn’t it be good to keep investing in, rather than shoring up, the economy?
After all, something like business as usual is usually good for business.
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The information in these reports is based on our understanding of the Chancellor’s 2019 Spring Statement, in respect of which specific implementation details may change when the final legislation and supporting documentation are published.
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