The 2017 Spring Budget began with Chancellor Hammond saying that the British economy has shown a robust level of growth and that this growth has confounded the commentators who predicted doom and gloom in the aftermath of the Brexit vote.
Introductory points raised about the economy include:
- A rise in employment rate while unemployment has fallen the fastest in Yorkshire and Wales
- Inflation is forecast at 2.4% in 2017, 2% in 2018 and 2% in 2019
- Forecast GDP growth in 2017 stands at 2%
- Debt forecast to be 86.8% in 2017 and then peak at 88.8 in 2019
The debate over the merits of the Spring Budget are already underway and it is no surprise that different party representatives are taking a very different view of the figures and steps that have been announced.
The leading elements of the Spring 2017 budget were:
- From April 2017, Corporation Tax will fall to 19% and in 2020; it will fall further to 17%
- A range of business cuts, amounting to a £435m cut, according to the Chancellor
- Treasury aims to raise an additional £145m by 2021-22 through additional tax of the self-employed
- The tax free dividend allowance will drop from £5,000 to £2,000 in April 2018
- A rise in the national living wage to £7.50 as of April 2017
- The Personal Allowance for taxation rises to £11,500
- A range of measures based around supporting education, including £260m to improve school buildings
- An additional £2b being provided for social care over a three year period with £1bn being made available in 2017/18
- A fund of £100m being set up to assist triage projects in A&E Departments, aimed at relieving pressure on them in winter
- There was a freeze in vehicle excise duty for hauliers, the HGV road user levy was also frozen and there were no alterations made to the planned duties for tobacco and alcohol
With respect to housing and infrastructure, the key elements were a promise to spend £90m in the north of England and £23m in the Midlands to relieve the pressure on pinch points on roads in these areas. There was also a commitment to spending £200m to improve local broadband networks while there has been £16m set aside to support studies and development of 5G mobile technology.
With respect to the property market, there are factors which may ultimately have an influence on property. Anything which introduces new schools to an area or raises the standard of schools will make an area more attractive to home buyers. The standard of schooling is a crucial factor in the property market so improvements here may have a positive knock-on effect.
Expenditure intended to improve roads and broadband connectivity can also improve some local areas, but it isn’t likely to have a huge impact on the property market. If the rise in employment can be sustained, with support for businesses aimed at achieving this, this could play its part in helping the property market continue along its current trend. Employment levels and confidence are big factors in whether people are willing to commit and invest in property, so there are a number of small steps that can be seen as a good thing when it comes to the property market in the Spring Budget.
However, even accounting for Brexit, the biggest factor in the property market in 2017, and for years to come, is the level of available housing. With no announcements about plans to increase the level of housing stock, all of the announcements in the Spring Budget are unlikely to shape, change or distort the 2017 UK property market too much.