Wednesday marked the first spring statement from chancellor Philip Hammond since changes to budget announcements were unveiled. Measuring current economic strength and progress since the budget, the spring statement has given us an overview of where the country currently stands – so what did we learn?

 

This week saw a change of pace around the Chancellor’s financial announcements. After stepping into the role in 2016, Philip Hammond made the bold decision to revamp the current budget timetable, arguing that ministers were under pressure to begin work on the next budget immediately after announcing its predecessor – an unusual custom amongst the world’s advanced economies.

As such, this spring’s budget was replaced with the first Spring Statement, a chance to review how the economy is progressing since the budget, make necessary adjustments and forecast the coming years.

Although not as riveting as a new budget, the statement still came with some surprises of its own.

 

The Light at the End of the Tunnel?

Overall, Hammond’s statement was an optimistic one; with both inflation and borrowing falling and the economy reaching a so-called ‘turning point’. But despite these positives – and his own comments likening himself to the A. A. Milne character Tigger – Hammond’s statement was closer to a mixed bag than an outright success.

A reference he’s been all too quick to make throughout his tenure so far is to “the light at the end of the tunnel”, even referring to said light during his Commons address. In reality, there’s still a long way to go before the UK’s economy stands strong again and it’s likely not to take place before Brexit.

Many critics, such as The Guardian’s editorial team; are drawing focus on continuing austerity, the shrinking of growth to only 1.3% – half of the rate in 2008, post-recession – and the immature labelling of austerity’s naysayers as ‘Eeyores’ (yet another Winnie the Pooh reference).

 

Addressing the Productivity Problem

One area of note which did come with some positivity was the approach towards solving the country’s productivity problem. Not helped by the recent “Beast from the East”, the UK’s productivity is struggling to compete with other countries around the world.

To ease the strain faced by low productivity, the Government has pledged more funding for apprenticeships and training – a point raised once again during the Chancellor’s speech. Despite the apprenticeship levy encouraging businesses to hire an apprentice, some small businesses are reportedly facing a challenge navigating the new system. To help, Hammond announced that £80m of funding would be made available to small businesses to assist in engaging apprentices.

Meanwhile, T-Levels – an ambitious new qualification based around technical skills – will soon be rolling out, with £50m being made available to help businesses facilitate the new qualification. Over in the construction industry, up to 20 industry-specific ‘skills villages’ will be able to bid for funding from a pot of £29m.

 

Transportation & Digital

Elsewhere in the statement, we had an update on the £1.7bn Transforming Cities Fund, first announced in the Autumn budget. The first half of the fund has been allocated to combined authorities with mayors, with the remaining £840m now open for bids from other cities across the country.

It’s hoped that, once funding is allocated, the Transforming Cities Fund will allow for stronger transport connections, improving access to talent, raising productivity and promote local growth within city regions. As we approach Brexit armed with a new Industrial Strategy, this funding will play a key role in strengthening the country.

Also gaining some much-needed attention in an effort to boost productivity is digital connectivity. Autumn 2017’s budget saw the launch of a £190m Challenge Fund aimed at rolling out full-fibre to local areas, providing businesses and homes with powerful internet connections. With remote working on the rise and more of modern life taking place online, such a fund is crucial in helping the UK to keep up. The Spring Statement allocated the first wave of funding, with £95m pledged to 13 areas.

 

Have Your Say

Aside from an update on current progress post-Autumn budget, the Spring Statement also came with an outline of different areas on which the government will be seeking consultation – including how to provide fairer taxation of multinational digital businesses such as Google and what role physical cash will play in the future.

Whatever your opinion of the Spring Statement or the new timetable for announcing financial updates, it’s safe to say that there were some interesting points, with much-needed funding being provided towards strengthening productivity. Unfortunately, we’ll have to wait a little longer to see what effect, if any, the unpredictable start to 2018 had on the UK’s economic strength.

In the meantime, cities and businesses must make the most of the funding on offer and keep carrying on together if we’re to weather the next few years.

 

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