Philip Hammond has delivered the first Autumn Budget in 21 years, which could also be the penultimate budget before Brexit, if the Chancellor keeps his promise to stick to one major fiscal event a year.
Here are the key points from Hammond's speech:
- The Office for Budget Responsibility has downgraded the 2% GDP growth it was expecting for 2017 back in March to 1.5%, while growth expectations for the next four years have also been lowered.
- Hammond unveiled plans to build 300,000 homes per year, up from the current 250,000.
- The Chancellor has also abolished Stamp Duty for all first time buyer purchases up to £300,000.
- The Government has pledged to allocate £2.3bn to investment in research and development.
- Britain's borrowing will stand at £49.9bn this year, £8.4bn lower than forecast in the spring budget
That concludes IBTimes UK's live coverage of the 2017 Autumn Budget, thanks for following it.
ACCA welcomes "sensible, steady" moves on tackling tax avoidance
Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants (ACCA) - the global body for professional accountants - said: "We are pleased with the range of tax avoidance consultations which the government has announced today. We will be working closely with the Treasury as well as OECD and the European Commission to ensure that tax avoiders have no place left to hide.
"We welcome the targeted, realistic and proportionate approach the government has taken and this is exactly how we should ensure we stop the promotors and users of such schemes."
Fintech boss welcomes doubling of Enterprise Investment Scheme limits
Anil Stocker, co-founder and chief executive officer, of MarketInvoice welcomed the doubling of Enterprise Investment Scheme (EIS) limits for innovative companies.
"The move will encourage even more private investment. The government now needs to simplify the EIS rules. Investing in EIS has been encouraged by successive governments to raise funds for many small, unlisted businesses who attract around £1.6bn a year.
"However, it wasn't all good news for EIS as Philip Hammond confirmed the type of companies that could be invested in will be restricted. As ever, the devil will be in the detail but properly targeted, this could encourage private investment in innovation."
Chancellor grips steering wheel on economy, says CBI
Commenting on the budget, Carolyn Fairbairn, director general of the Confederation of British Industry, said: "Against a sombre economic backdrop, the Chancellor today gripped the steering wheel on the UK economy. This is a budget that balances support for people on squeezed incomes with vital action to help grow the UK out of austerity. But delivery is everything.
"Action on business rates, research and development tax credits, the National Productivity Investment Fund and Brexit planning will help firms to invest and grow today against an uncertain Brexit backdrop. It was good to see focused investment in the long-term drivers of growth that underpin sustainable prosperity."
Up to '4,000 more companies' to become VAT registered per year as threshold frozen
Research by global accounting firm Deloitte suggests up to 4,000 more businesses might become VAT registered per year following the budget, with the Chancellor deciding to freeze the threshold at £85,000 for two years while consulting on whether a reduction would be feasible..
Daniel Lyons, indirect tax partner at Deloitte, says: "On the evidence of the recent Office of Tax Simplification report this might result in an extra 4,000 or so businesses per year becoming VAT registered generating extra revenue of approximately £10m per year.
"Clearly freezing the registration threshold will do nothing to alleviate the problem of small business 'bunching' below the VAT registration threshold which many consider to be a drag on economic growth."
Low productivity will continue to dampen UK economic outlook
Hammond described low UK productivity growth as a long-term problem and unveiled plans to improve maths in schools and investing in transport to improve the situation.
But Andrew Sentance, a former Bank of England policymaker and senior economic adviser at PwC, said the issue of disappointing productivity growth is expected to continue to dampen the outlook for the UK economy.
"Medium-term growth forecasts have been downgraded by the OBR. There were some modest measures in the budget to support training and transport infrastructure. We will hopefully hear more when the government's Industrial Strategy is launched on Monday (27 November)."
Citizens Advice gives cautious welcome to Universal Credit tweaks
Chancellor Hammond announced the removal of the seven waiting days before a claimant can apply for Universal Credit in his budget; and significant improvements to the advance payments system - including increasing the amount available and extending repayment periods; and changes to support people with their rent payment when moving from Housing Benefit to Universal Credit.
Citizens Advice, a network of around 300 independent charities which has helped people with over 100,000 Universal Credit issues since the benefit was introduced, gave the proposed changes a cautious welcome.
Chief executive Gillian Guy says: "The changes are a very welcome step towards fixing the problems with Universal Credit, and should make a significant difference to the millions of people who will be claiming Universal Credit by the time it's fully implemented. We'll continue to keep a close eye on the roll-out of Universal Credit and make sure they do.
"The next step will be to make changes to work incentives, so that no one is left worse off under Universal Credit than they would be under previous benefits."
NHS Employers welcomes lifting of pay cap
NHS Employers, part of the NHS Confederation charity, welcomes lifting of the pay cap for healthcare professionals in the budget.
Danny Mortimer, chief executive of NHS Employers, says: "There is a great deal to discuss, but the Chancellor's commitment to fund the additional pay bill is welcome. Meanwhile, NHS organisations are working hard to address staff concerns and better retain vital skills. But they also need national support.
"Increasing training numbers and improving access to affordable housing are welcome recent interventions to help employers recruit and retain staff, but investment is also needed in training budgets (known as continuing professional development, or CPD) as well as reform of migration policy and greater flexibility in apprenticeships."
Cutting through CPI to RPI business-rate relief proposal
The number crunchers at Deloitte have examined the Chancellor's CPI (consumer price index) to RPI (retail price index) business-rate relief proposal. The Chancellor announced that the annual inflationary uplift, which is currently linked to RPI, would be linked to CPI from 2018.
Gerry Biddle, director of business-rates at Deloitte Real Estate, says: "This will save ratepayers 0.9% and will cost the Treasury approximately £253m next year. The announcement brings forward the move from 2020 and it will be welcomed by hard pressed business occupiers."
Table below courtesy of Deloitte (click to enlarge).
GDP forecast reaction
One of the key points of Hammond's speech was that the British economy is now expected to grow by 1.5% in 2017, revised down from the 2% forecast made in March.
"The OBR's prediction that GDP will rise by just 1.3% in 2019 and 2020 could well be too pessimistic, assuming that a hard Brexit is avoided," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
"But on the other hand, the cost of further increases in income tax thresholds, and likely freezes in fuel duty, are not embedded in the forecasts."
Kathleen Brooks, research director at City Index, added: "Although GDP was expected to be revised lower, forecasts were not expected to be slashed to this extent.
"The OBR forecasts are significantly below the BoE growth forecasts, which has led to the market to view them with suspicion."
Corbyn hits back at Budget
Following the budget announcement from Philip Hammond, Labour leader Jeremy Corbyn has dismissed the speech as another notch on the government's "record for failure".
Speaking just after Hammond's speech, Corbyn said: "The test of a budget is how it affects the reality of people's lives all around this country.
"As the budget unfolds, the reality is that a lot of people will be no better off and the misery that many are in will be continuing."
More on the Labour leader's reaction here.
Stamp Duty reactions
Hammond's decision to abolish Stamp Duty for all first time buyer purchases up to £300,000 has been met with mixed reactions.
"Eliminating Stamp Duty on all properties up to £300,000 will only help those buyers who are already making progress on saving a deposit," said Tim Bennett, head of education at Killik & Co.
"This is treating the symptom, not the cause. The real challenge is to help buyers save that initial deposit."
Elizabeth Bradley, partner and head of Tax at Berwin Leighton Paisner, added: "This will be a welcome move for thousands trying to get on the property ladder but it is far from the bold gesture needed to undo the damage that has been done by past reforms.
"The government has to acknowledge that there is a problem with the overly complex residential stamp duty land tax regime. It is time for real change to address this, not just tinkering."
David Battiscombe, consultant, at Berwin Leighton Paisner, said: "A politically driven Stamp Duty cut may be welcome news for first time buyers but if, as intended, it increases demand then an unintended consequence may well be to push up house prices."
Brexit remains the major uncertainty
"Brexit remains the key area of uncertainty for both GDP growth and the budget deficit, with the key unknown being whether a comprehensive deal can be achieved in both the goods and service sectors," said Shilen Shah, Bond Strategist at Investec Wealth & Investment.
"The key risk for the economy however remains whether a service sector agreement can be reached, given that it makes up more than 80% of the economy and its one area of trade where the UK has a surplus with the EU –in contrast to the manufacturing sector."
You can read the Budget here
Hammond's speech has finished
The Chancellor has now sat back down and Labour leader Jeremy Corbyn is now up.
Stamp duty abolished
In a move designed to help people in struggling housing markets such as London, the Chancellor has vowed to abolish Stamp Duty. "For all first time buyer purchases up to £300,000 I am abolishing stamp duty altogether," says Hammond. He adds people buying a home worth up to £500,000 will not have to pay stamp duty on the first £350,000.
As part of his housing reforms, Hammond states the government is committed to build homes in the Oxford-Cambridge corridor. The Chancellor adds the government wants homes built in high-demand areas and around transport hubs, adding the communities secretary Said Javid will make a further statement in due course.
Hammond turns to housing now and says the government plans to build 300,000 new homes by 2020, but warned solving the housing problem will "take more than money, it will take planning reforms".
The number of young people owning their own home has dropped from 59% to 38%, he says but Theresa May has pledged to address the issue. Over the next five years, £44bn will be committed to help the housing market and the Chancellor has also unveiled plans to legislate for councils to be allowed to impose a 100% empty homes premium on properties left vacant.
Hammond says the Grenfell tragedy "should have never happened" and that the government will provide Kensington and Chelsea Council with a further £28m for mental health services, regeneration support for the surrounding areas and a new community space for the Grenfell United.
Pounds sees marginal slip in wake of economic forecast downgrades
Reacting to the Chancellor's downgrading of the UK's economic forecast, the pound saw marginal declines of 0.11% and 0.05% versus the euro and dollar, changing hands at €1.1266 and $1.3232 respectively.
Michael Metcalfe, global head of macro strategy for at State Street Global Markets, says: "The government has committed funds to help with the preparation for Brexit contingency planning. But high inflation and an expected weakening in growth provide a potentially troubling backdrop for markets even without the political uncertainties created by Brexit."
Switch to CPI business rates to be brought forward
The Chancellor says the switch to business rates measured by CPI inflation index rather than by RPI will be brought forward, after he listened to concerns over the rising costs of business rates.
The switch will now become effective in April 2018, two years earlier than planned, and will save businesses a combined £2.3bn.
Fuel duty frozen (again!)
Hammond has rolled over the fuel duty freeze, cheering lobby group FairFuelUK.
Commenting on the decision, the group's Quentin Willson and Howard Cox say: "We're pleased that the Chancellor has understood the debilitating effect of raising fuel duty on consumers, households, businesses and the broad economy. He knows that now is not the time for gesture politics and that's why he's listened to the everyday anxieties of drivers."
Threshold for VAT registration to stay at £85,000
The threshold for VAT registration will remain at £85,000 for the next two years, dismissing speculation he would lower it.
Hammond adds the VAT registration is by far the highest among OECD countries, but it keeps most small businesses out of VAT
NHS to get extra funding
The Chancellor says the NHS will get an extra £10bn capital investment over this parliament and it will also receive an extra £3.75bn this year for its current budget, with £2.8bn destined to the NHS in England.