This was a positive speech from the Chancellor. With growth up and borrowing down, he was much more upbeat. However, the improvement in the economic growth forecast and the public finances are short term – the long-term challenges remain. Some of the most noteworthy aspects of his speech related to the economy and public finances rather than new policies.
The budget had no surprises and many of the aspects mentioned were very much of a ‘to be continued’ mindset, with a second budget coming later this year as well as the continued austerity measures. We’re moving towards a ‘more tax, less spend’ model, and on the tax model, it was very much a ‘tax on selfies’. National Insurance Contributions for the self-employed will rise to 11% in the next two years, bringing it in line with their counterparts. In addition, the tax-free dividend allowance will be lowered to £2,000 in April 2018.
Finally, it’s worth remembering policies announced in previous budgets come into effect this April - such as the apprenticeship levy and the increase to the tax free savings allowance for ISAs.
Senior Economist, NatWest