The UK economy has grown faster than expected, with an anticipated £29bn windfall against the Office for Budget Responsibility’s (OBR) November projections. This is thanks to stronger tax receipts and a greater than anticipated economic resilience in the wake of Brexit, according to think tank, the Resolution Foundation.
This would be the first time since March 2014 that a Budget would announce that borrowing will be lower – not higher – than previously thought. These positive forecasts have led to predictions of a £16bn budget deficit in 2020-21. This is a reduction from the November forecast of £20.7bn although it remains significantly higher than the £11bn budget surplus projected this time last year. This poses significant challenges if Chancellor of the Exchequer, Philip Hammond, is to achieve the Government’s aspirations for an absolute surplus in the next parliament.
While businesses have reported higher confidence in the economy, according to Deloitte’s optimism index, this is not reflected in consumer confidence as a weak pound has raised the cost of imported goods.
This Budget will be the last fiscal spring event, following Hammond’s announcement that the Budget will move to October (resulting in two Budgets in 2017). From 2018, there will be a spring update which will not be used to announce new policy.
The PR Office has identified the three key areas where it is anticipated that the Chancellor will be making announcements.
Read the full report here.