What it is
Each year the Chancellor delivers a Budget statement to the House of Commons to outline the state of the economy and the Treasury’s potential tax changes. This year, the spring statement takes place on the 13th March. With the event taking place just 17 days before the UK’s planned departure date from the EU on 29 March, it is possible it could be upgraded to include major policy announcements.
So what is the difference between the spring statement and the autumn budget? Whilst both feature speeches to the House of Commons by the Chancellor of the Exchequer, the statement is more like an update of how the economy is doing – rather than a change to tax or spending. The autumn budget outlines the Chancellor’s future plans for the UK in the coming financial year.
The 2018 Spring Statement lasted less than half the length of any of Hammond’s previous speeches as Chancellor, with the promise to move away from two fiscal announcements every year. However, Philip Hammond loosened the purse strings when delivering Budget 2018 last November and he left the door open to make the Spring Statement a bigger deal than last year’s, stating: “”If the economic or fiscal outlook changes materially in-year,” said Hammond, “I will take whatever action is appropriate, including the right to upgrade the Spring Statement to a full fiscal event.”
What to expect
Response to OBR forecasts
The main part of the speech will consist of the Chancellor’s response to new forecasts from the Office for Budget Responsibility (OBR).
These will set out the outlook for the economy and public finances, and assess whether the Government is likely to achieve its fiscal targets.
Consultations and announcements
The Spring Statement will also be a chance to announce consultations on new policy changes or provide an update on those already in progress.
These might include areas such as taxation in the digital economy, environmental measures to tackle climate change, and the extension of IR35 to the private sector which is set to take place from 2020.
Hammond is also expected to unveil an investment of £200 million in scientific research, including laser technology and genetic research.
With the UK still set to leave the EU in less than three weeks’ time, Brexit – and its potential impact on the economy – is likely to overshadow the speech as a whole.
The Chancellor has reserved his right to upgrade the Statement to a full fiscal event “if the economic or fiscal outlook changes materially in-year”.
Alternatively, there could be hints at an emergency Budget later in the year, depending on whether a Brexit deal is secured.
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