News releases

UK Budget: Stamp duty cuts can't hide economic challenges


Schroders experts Azad Zangana, Sue Noffke and Alix Stewart discuss the economic and market implications of today's UK Budget. 

Azad Zangana, Senior European Economist, Schroders: 

"The headline from the Budget will be the large downgrades to the UK’s future path of Gross Domestic Product (GDP) and productivity growth. The Office for Budget Responsibility (OBR) has downgraded its forecast for real GDP growth in each year of the forecast, with nominal GDP 2.5% lower by the end of the forecast horizon. This naturally led to a higher forecast for borrowing in coming years, with most of the Chancellor’s headroom removed.

"There was a small net fiscal giveaway in this Budget too from the Chancellor, with most funding directed towards the National Health Service (NHS), measures to encourage greater investment, and housing. The NHS and housing had to be targeted by the Treasury as the public considers both these areas to be in crisis. 

"While the Chancellor’s efforts to boost housing supply should be welcomed and are long-overdue, the scrapping of stamp-duty for first time buyers (the majority of buyers in the market at any point in time) will simply serve to distort property prices further. Indeed the OBR has said that it does not expect the policy to help first-time buyers, but will help sellers.

"Overall, this was not the bold, game-changing Budget that many in Chancellor’s own party were demanding. However, the Chancellor's giveaways may just about be enough to satisfy the headline writers, and keep him in his job for now." 

Sue Noffke, Fund Manager, UK Equities, Schroders: 

“Despite the Chancellor’s stamp duty announcement and commitment to £44 billion of extra funding for the housing market, homebuilders’ share prices are down a little this afternoon.

“The Help to Buy scheme, which has been a big support for the sector, is due to end in 2021. It remains to be seen whether the abolition of stamp duty for first-time buyer purchases up to £300,000 will be an additional boost to the sector, or ultimately replace the benefit that Help to Buy has so far provided.

“Investors currently appear to be underwhelmed by these housing market announcements. Until now, homebuilders have been in a great sweet spot thanks to relatively subdued increases in supply, robust demand, low interest rates and Help to Buy. Shares for the sector are up about 35% over the past 12 months so I think we are now seeing some profit-taking.”

Alix Stewart, Fund Manager, Fixed Income, Schroders: 

“So far the gilt market seems unfazed by the Budget and Sterling has held up pretty well.

“The OBR's growth forecasts have been lowered by more than the market expected and the Chancellor is being more prudent on the Budget deficit than he might have been. This is resulting in less likelihood that the Bank of England will raise interest rates much more (if at all). In addition, gilt issuance, while a little bit higher than expected from 2019 onwards, isn’t too much to worry about.

“The downgrades of the UK’s productivity forecasts are also likely to offset any inflationary pressures from the increases in the National Living Wage, as will the freezing of duty on alcohol and air fares. Market inflation expectations were a little lower as a result.”


For further information, please contact:


Andy Pearce, Institutional Tel: +44 (0)20 7658 2203 /

Charlotte Banks, Intermediary   Tel: +44 (0)20 7658 2589/

Sarah Deutscher, International   Tel: +44 (0)20 7658 6139/


Notes to Editors

Important Information: The views and opinions contained herein are those of Azad Zangana, Senior European Economist, Sue Noffke, Fund Manager, UK Equities and Alix Stewart, Fund Manager, Fixed Income and and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. The opinions in this document include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change.