Philip Hammond’s final Spring Budget offered very little in the way of surprises – until, that is, he announced a U-turn on its centrepiece policy just a week later. But that was more or less the only drama to stem from Mr Hammond’s inaugural effort, the chancellor having replaced George Osborne last summer as the vote to leave the European Union (EU) ushered David Cameron’s government out with it.
Add the embarrassment to the absence of major reforms, and the March Budget – renowned under Mr Osborne for its showpiece policy statements – has gone out with a whimper rather than a bang. The chancellor revealed last November that this would be the last time that the spending programme was held in spring. Instead, he will now deliver an Autumn Budget and a Spring Statement. For all the lack of policy this time round, Mr Hammond will be back in eight months’ time with another set of proposals.
There is a good chance that Mr Osborne’s showstoppers are a thing of the past, whatever the personal preferences of the man with the red box, because the tame nature of this announcement was also understandable given the shadow that loomed over the speech.
The Brexit wheels are very much oiled and starting to turn, meaning an aggressive overhaul of taxation and spending would risk further complicating an outcome that remains shrouded in uncertainty.
Whether Leave or Remain, advisers may well be thankful for this consequence, given how the Budget has caused a few earthquakes across the savings landscape in recent years.
Mr Hammond focused much of this Budget on rubber-stamping plans outlined in last year’s autumn statement. As expected, a gentle increase to the personal allowance was implemented, together with plans to introduce an NS&I three-year bond paying 2.2 per cent pa, allowing investments up to £3,000 each year.
The interest rate offered is on a par with the market leader, Atom Bank, but may have been less attractive than some had hoped for.
Mr Hammond also had the luxury of announcing improved near-term growth. The Office for Budget Responsibility (OBR) increased its growth forecast for 2017 to 2 per cent, having originally predicted a rise of 1.4 per cent.
Closer inspection of the revised estimates for future years offers a slightly dimmer view. For example, anticipated growth in 2018 and 2019 has been revised down from 1.7 and 2.1 per cent to 1.6 and 1.7 per cent, respectively. These figures are likely come under further revision, one way or another, as the terms of the UK’s departure from the European Union become clearer.
