The Spring Budget on reflection...

It is fair to say, I was not looking forward to yesterday’s budget. These 'high tax/ high cost of living times' affect us all, from the rich to the poor and everyone in between. Granted, the volatile situation in Ukraine is certainly not receding, if anything, it is escalating both on the ground and politically, there is only so much the Chancellor can do, isn’t there??

As a member of the Conservative party, I believe more can be done. We should be making a statement and demonstrating why we are Great Britain and utilising the benefits, the powers, and the freedoms that Brexit was meant to provide.

The Economy

The announcement that the UK will not enter a ‘technical recession’ this year is welcomed news. However, this will mean little to the masses and it will still feel tough for the average household, with wages being stifled by inflation.

The OBR is predicting inflation will fall to 2.9% by year-end. This will move closer to the government’s target of 2%, representing a huge difference to the existing double-digit figures we are currently experiencing.

Hunt says growth will resume in the economy next year to the tune of 1.8% and then 2.5% in 2025.

One question I was asked by a colleague yesterday intrigued me, “will the prices of goods and services come down to pre-cost of living crisis levels?” Unfortunately, I suspect the answer to that is a resounding no as a new norm has been set. So, it will have to be in the form of wages catching up or tax cuts, which historically, is the conservative way of doing politics.

Property & Mortgages

Now to the sector that many of those reading this are fortunate to operate in. Absolutely nothing, nada, zilch! Nothing for developers, first-time buyers, VAT on renovating existing properties, nothing. The housing market is a significant contributor to UK Plc and therefore, something should have been included to keep the wheels turning.

Business Support

The chancellor said in his speech, he wants to create “the most pro-business, pro-enterprise tax regime anywhere”, then proceeded to announce a planned increase in corporation tax from 19% to 25% in April, on profits above ￡250,000. Seems logical doesn’t it…

In addition, he announced a new ￡9bn policy for “full capital expensing.” Initially for three years, will allow firms to write off all investment into the business against their tax bills. The OBR state this will boost business tax by 3% a year.

Businesses will also be able to claim a new “enhanced credit” for research and development worth ￡27 for every ￡100 they invest.

One surprise was the draught relief with the duty paid in pubs up to 11% lower, calling this the “Brexit pub guarantee” stating this would not have been permittable inside the EU. So, my big budget win is a marginally cheaper pint, oh the joys.?

Fuel Duty

Another mini surprise was the extension of the 5p cut in fuel duty for a year and the freezing of fuel duty for the next 12 months. But it will still cost us all a princely sum to fill our tanks, I am currently around ￡110 a tank which is roughly half in sunny Spain as I experienced as recent as last week.?

Energy Bills

As expected, the government is extending the energy price guarantee (EPG) which keeps the average household bill at ￡2500, until the end of June. The energy rebate scheme paid direct to customers will not be extended and ends this month. Whether or not we see a return to cheaper energy prices, remains to be seen, as previously mentioned I think it will be more a case of the Government attempting to put more money in our pockets rather than prices falling dramatically. The downside to this, of course, is that it won’t happen overnight and therefore more pain will ensue.?

Other

• Medicines approved by other trusted global regulators will be eligible for “near automatic” sign off
• Defence spending will rise an extra ￡11bn over the next 5 years
• An extra ￡200m, to the committed ￡500m will be made available for the pothole problem.
• Annual Allowance increase for Pensions from ￡40,000 to ￡60,000
• 30 hours free childcare for children over the age of nine months

Summary

Families with young children now get additional support in childcare costs, encouraging people to return to work. Changes to Pension legislation are also a boost and could prevent many from getting hit with additional tax bills.

Businesses will be hit with an increase in tax, not something I would say is very Conservative. The chancellor has tried to offset this with other measures, but quite frankly, it should have remained at the current level. For me, a mix of the cautious Hunt and the bold Kamakwasi Kwarteng would have been a sensible and growth focussed approach fit for today.

Mr Hunt proclaims to have produced a budget focused on growth and the future prosperity for the economy, housing and the overall property sector has been well and truly overlooked. First-time buyers are an essential component of the property market and with the cost-of-living crisis and increase in mortgage rates, some could be renting forever which is sad.?

To end, the housing & property market… enough said!