Following Philip Hammond’s Spring Statement delivered on Tuesday 13 March, Professor Peter Urwin said: “Despite immense pressure to loosen the purse strings, Philip Hammond ensured his Spring Statement was a non-event. Although, at first glance, conditions may have seemed right for increased spending.
“Since November, the Office for Budget Responsibility (OBR) has brightened its fiscal outlook, giving the Chancellor an ‘unexpected’ £10bn, while productivity picked up in the second half of 2017, and better economic news since January raised growth forecasts for 2018. However, this recent economic good news is only a slight revision, rather than a fundamental rethink. The OBR feels the productivity boost looks odd; the ‘extra’ £10bn is money we didn’t borrow, rather than money we actually have, and revisions to 2018 growth are minimal, simply reversing the over-confidence of last year’s forecasts.
“The ‘upside’ is therefore minimal, but the ‘downside’ is substantial; the Chancellor knows a Brexit hit will arrive at some point. As the Government’s current position in talks with the EU is continued obfuscation on free movement, the Northern Ireland border and trade, the ‘hit’ has likely been kicked into 2019. The powder is being kept dry for this battle.”