Will spring statement 2019 be worth the effort?
February 19, 2019
Tony Medcalf, tax partner at MHA Moore and Smalley, looks ahead to the spring statement on March 13 and how Britain’s scheduled departure from the EU just 16 days later may impact this.
In just under a month’s time, chancellor Phillip Hammond will stand up in the Commons to give the last major economic statement before Britain leaves the EU on March 29.
With the nature of that departure not yet clear, I can’t see what could possibly be announced in the spring statement that would suitably ease the concerns of business owners or have them planning any further ahead than the next few weeks.
Since the chancellor moved the budget to the autumn he has made the spring statement merely an update on economic forecasts, rather than a fiscal event in its own right, so I wasn’t expecting much in the way of major announcements anyway.
But when you throw in the uncertainty, and the fact we may need an emergency budget post March 29 anyway, it seems rather a waste of time. I’ve even been joking with colleagues that Mr Hammond may have to sing, dance or do a stand-up routine to try and fill his allotted time at the despatch box.
None of this is meant to sound negative. I think whatever happens on March 29, Britain will recover quickly. If we leave with a deal then I foresee us getting the economic ‘Brexit bounce’ the prime minister has talked about previously as the pound strengthens, stock markets rally and GDP increases.
Even if we leave without a deal, while we will see a slowdown and a likely recession in the short term, businesses always adapt, and I think we would be able recover relatively quickly.
We’re certainly in a stronger starting position for a recession than we were last time when the banks had a major lack of liquidity and the downturn impacted most advanced economies around the globe.
The stress-testing conducted in the wake of the banking crisis means lenders are far more prepared this time. Meanwhile unemployment is low, interest rates are low, and inflation is relatively stable.
I may be wrong, but I think the spring statement will be a case of the chancellor going through the motions. In that event, it may not be worth the paper it’s written on.
If you would like to discuss this in further detail please contact Tony Medcalf on 01772 821 021.