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A summary of UK spending plans for 2018
A summary of the Chancellor's Spring Statement 2018 and how it affects UK SMEs.
This year, the Chancellor (Philip Hammond) presented his first Spring Statement, confirming the government’s Major Tax and spending plans for the next year.
The Spring Statement includes: - An update on the overall health of the economy and the Office Budget Responsibility (OBR) forecasts - An update on progress made since August Budget 2017
You’re also invited to give your view on any changes the government is considering.
Here are the highlights.
A look at the current economic climate for UK SMEs
The economy continues to grow, creating more and more jobs, and beating expectations.
Following the EU referendum vote in mid-2016, the value of the sterling depreciated. This had a knock-on effect that offered a mix of disadvantages and advantages for businesses. An increase in consumer price inflation (CPI) and dampening of household real income growth means consumers are able to spend less. But, for export oriented businesses, a drop in the value of the pound is an advantage, as it means international buyers are getting more for their money.
Employment has increased by 3 million since 2010, which is the equivalent of 1,000 people finding work every day. There is also a joint record number of women in work – 15.1 million. The Office Budget Responsibility (OBR) predict there will be over 500,000 more people in work by 2022. So, for business growth, the outlook is looking promising.
The OBR expect inflation to fall over the next 12 months, and wages to rise faster than prices over the next five years.
Despite the UK’s economic growth, debt remains high
The UK’s debt sits at around £65,000 per household, making the economy vulnerable to future shocks.
The cost of debt interest payments is around £50 billion each year - higher than the amount spent on our police and armed forces.
Progress since Autumn Budget 2017
Businesses to benefit from business rate revaluations earlier
The last budget announcement confirmed that business rates revaluations will take place every three years, rather than every five years. This makes bills more accurately reflect the current rental value of properties. The next revaluation, currently due in 2022, will be brought forward to 2021. This means businesses can benefit from the change earlier, with the first being implemented in 2024.
Improving digital connectivity for UK SMEs
In the last budget statement, a £190 million Challenge Fund was launched to help roll out full-fibre to local areas was launched. This provides the fastest, most reliable broadband to more homes and businesses. The Spring Statement 2018 allocates the first wave of funding, providing over £95 million for 13 areas across the UK. For more information about the Spring Statement, visit gov.uk.