If I had to describe this budget in one word, it would be bland. It was small and unimportant. It was nothing more than paperwork required. This is because Hammond is moving the budget to Autumn. However, a yearly budget is required.
None the less, there are some interesting policies, a few of which would really upset his own back benches as well. So lets get stuck in.
There is really little point in trying to predict the growth of the economy right now. This is mainly because nobody knows what Brexit will be like. However, this is the job of the OBR (Office for Budget Responsibility) who have said that growth this year will be 2% (up from their previous prediction of 1.4%). However, they have downgraded their predictions for 2018 from 1.7% to 1.6%.
The economy seems to be stronger than predicted as consumption hasn’t fallen. This is because the majority of people are happy with the referendum outcome.
Inflation is meant to stay between 2 & 2.5% until 2020. This is well within the Bank of England’s target. Economic logic does dictate that some inflation is good as it encourages spending. However, there was a fear that inflation would get much higher.
Unemployment is expected to stay at about 5% (something I predicted at the beginning of the year, just saying). Although, I’m highly doubtful this will lead to much real wage growth
One of the things that the Sun Mail and the other rubbish picked up on was the increase in national insurance contributions. In Lehman’s terms these are a tax payed by workers and employers with a nice name. It is increasing from 9 to 11% and will effect all earnings between £8000 & £43000. This will be unlikely to effect employment and if anything would affect bonuses for workers.
Hammond’s justification for this rather unconservative policy was that it would help save up for Brexit, which will weaken the economy.
The ideas logical, but how much can an umbrella help when walking in a hurricane.
Self employed people are likely to be effected. But this is only to the extent of an extra 60p per week on average, the cost of a 1st class stamp.
Hammond has put aside £216m for current schools to upgrade and £320m for new free schools and grammar schools. I don’t know enough about grammar schools or free schools and their benefits to argue either way.
What I do find interesting is the new T-Level system for technical educations. If these are seen in similar regard to A-levels, they could balance out the economy which is currently too reliant on services. With half the population going to university, T-Levels could help rebalance the workforce and encourage more young people to take up vocational subjects.
NHS & Care
The government have announced an extra £2bn for social care. Currently £10bn is spent on care for the elderly, so this will help those who need care.
However, there was a distinct silence on the NHS. This has been a point that the Torys have looked weak on and are not willing to give it much more funding.The NHS does potentially look like it could be in trouble and obviously won’t get that extra £350 million a week. It was never going to get that though.
There was also a notable silence on housing.
This was a playing safe budget, however whether a windbreak can prepare you for a tornado, we will have to see. This is not very likely though. Thankfully Mr Hammond seems to be flexible and responsive unlike his predecessor whom, one could argue, was far too target driven no matter what the consequences. This was a relatively responsible budget, but his protection measures probably won’t be enough when the full force of Brexit hits the UK economy.
While he is receiving negative press, this budget will not live long in the memory of many journalists or voters. His Autumn budget is no doubt the one that we will be looking out for with keenness.