Budget Stalemate

With the excitement (in the loosest sense) of the Budget moving from Spring to Autumn, the unveiling of the Budget by Philip Hammond on 22 November 2017 looks a pretty difficult one.

 

His intention is to increase spending on public services but there is the looming threat that the UK could see a cut in the forecast for productivity growth (and tax income receipts)……and at the same time address the deficit. There is only so much you can do when you are tightening your belt and I think the word ‘balance’ will be overused in the run up and beyond.

 

He has ‘gone large’ on stating that he aims to eliminate the budget deficit (the difference between the Government's everyday spending and the money it has coming in) by the middle of the next decade. Originally it was meant to be 2020 under George Osborne……remember him!!! That’s the same political party kicking the can down the road for a further 5 years!

 

Which brings me nicely on to an argument I have with myself repeatedly……does it really matter what Philip Hammond says or does later this month?

 

Firstly, he won’t be about (in the same way as George Osborne) when the grand master 2025 plan can be dissected. Secondly, there is Brexit. There are so many variables to be ironed out with Brexit that will impact massively on our economy that it is almost impossible to set a budget for the next 8 months let alone 8 years to 2025. And by extending the negotiations by a further 2 years after the 2 years notice period, we extend and prolong the financial guessing game.

 

I do feel sympathy with the Chancellor as he has been dealt a very tricky hand……but the sympathy will be short lived if the Budget Statement ends up being nothing more than a tool to spin things with ‘tax giveaways’ for cheap political wins.

 

Interesting times.