UK Spring Budget 2017: No time for complacency ahead of tricky two years

No alarms and no real surprises from Chancellor of the Exchequer Philip Hammond as he seeks a firm fiscal footing ahead of a crucial period.



Sue Noffke
Head of UK Equities

It was pleasing to see the Chancellor stick to his "no surprises" mantra and stress the importance of avoiding complacency in what was the UK’s final Spring Budget.

Ahead of Theresa May activating Article 50 and what could potentially be a tricky two years of negotiations with the EU, it is crucial that the UK is on as sound a fiscal footing as possible, and is not distracted by any unnecessary budget gimmicks.

Even though the UK economy has performed robustly following the UK’s vote to leave the EU it is good to see the Chancellor exercising fiscal prudence.

It will also be reassuring that the Chancellor has opted not to increase spending despite borrowing coming in lower than expected, particularly if the Brexit talks prove particularly difficult and start to impact on economic growth.

Notably, the Chancellor has moved to address the tax discrepancies that exist between employees and the self-employed. This could act as an extra avenue of tax receipts with the Chancellor having very little wriggle room to boost any other areas. But, at the same time, it is crucial that this is not to the detriment of the growth and innovation of what is, in large parts, a burgeoning sector, as displayed by the growth of the "gig economy".

Overall, the Chancellor has delivered generally what the UK could have hoped for, buoyed by good GDP and fiscal news. But with the hard work and uncertainty of the Brexit negotiations soon to begin, it is important to not get carried away.

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Sue Noffke
Head of UK Equities


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