Philip Hammond’s spring Budget was a disaster. The Chancellor’s decision last week to knock the self-employed, at a time when such flexible, often entrepreneurial workers have helped drive the UK’s employment boom, has badly backfired.
This row over national insurance contributions, though, while serious, shouldn’t detract from other important aspects of this budget. On the plus side, Hammond confirmed corporation tax will fall from 20pc to 19pc next month and 17pc by 2020. I was also pleased by what looks like a genuine commitment to boost vocational training.
Last week’s Autumn Statement has provoked an extended gloom-a-thon. Those hoping to reverse the UK’s Brexit referendum, inevitably, were out in force. Scandalized at not getting their own way, countless political and media bien pensants have been doing their utmost to talk down the British economy ever since the vote went against them five months ago.
The negativity that’s followed Chancellor Phillip Hammond’s first Commons set-piece is just their latest attempt to spread panic and cower the government ahead of crucial negotiations on our European Union exit.
Has there ever been so much uncertainty surrounding an Autumn Statement? Phillip Hammond, while a significant player within the Conservative party for some time, has become Chancellor despite having little public profile beyond the “Westminster bubble”.
The fiscal views of the UK’s bean-counter-in-chief, moreover, remain something of an enigma. No-one seems able to say definitively if Hammond will continue with the Tories’ “austerity programme” or, in a rhetorical reversal, “loosen the purse strings” instead.
A tumultuous week for the pound. And there could be more to come. Sterling, at the time of writing, is below $1.24 – down from $1.29 last weekend. The markets are properly spooked.
This latest currency fall was sparked early last week, when Prime Minister Theresa May signaled her preference for “hard Brexit”. But then the pound plunged more. Friday’s “flash crash” – which saw sterling touch $1.18, before recovering – followed warnings from French President Hollande that Britain would “pay” for leaving the European Union. That apparently triggered a wave of automatic, computerized sell-offs.
For months, as negotiations on the UK’s relationship with the European Union have become increasingly fraught, our political classes have assumed – asserted even – that the upcoming referendum will be held in the middle of this year.
I’ve never been convinced. I’m not saying an early vote won’t happen, but I do think there’s a high probability this near-ubiquitous mid-2016 assumption will be proved wrong. And that has significant implications, of course, for investment and our broader economy.