The Budget: Setting the scene for an “orderly” Brexit?

The first full post-Brexit Budget was announced yesterday. What was in it?

Chancellor Philip Hammond opened yesterday’s Budget speech referring to an economy that “has continued to confound the commentators” by recording growth at a faster rate than every major economy bar Germany. However, as the UK looks towards leaving the European Union, the Chancellor’s approach appeared somewhat more subdued. There was, he said, “no room for complacency”.

Announcing that the Office for Budget Responsibility has revised upwards its growth forecasts for 2017 from 1.4 per cent to 2 per cent, and that borrowing would be £16.8 billion lower than previously forecast, Mr Hammond stated that the plan provides “a strong and stable platform for those [Brexit] negotiations.”

He proposed to raise National Insurance Contributions from amongst the self-employed (9 per cent to 11 per cent by 2019), an attempt to counter what he described as unfairness in the National Insurance Contributions system. Elsewhere, a reduction of the UK’s level of Corporation Tax to 17 per cent by 2020 was outlined, along with £435 million worth of measures to help mitigate the impact of rates increases on pubs and small businesses.

From Northern Ireland’s perspective, the Chancellor announced that the Treasury will distribute an additional £115 million to an incoming Executive. This compares with £200 million and £350 million for the Welsh and Scottish governments, respectively.

There were other newsworthy developments. Additional funding of £2 billion – available over three years – is aimed at easing pressure on England’s social care system. The National Living Wage will rise again in April to £7.50. In addition, the personal allowance is set to climb for the seventh consecutive year, to £11,500, with the higher rate threshold moving to £45,000.

Mr Hammond pledged £16 million for a new 5G mobile technology hub and £200 million for local projects to leverage private sector investment in full-fibre broadband networks. He also promised measures to improve the national road network and tackle urban congestion in England.

As for the soft drinks levy, the Chancellor confirmed the final rates of 18 pence per litre for the main band and 24 pence per litre for the higher band. He pointed out that some producers are already reformulating sugar out of their drinks, leading to a lower revenue forecast for the tax. “This is good news for our children,” he said.

Mr Hammond concluded his speech by looking towards Brexit, speaking of “a new chapter” outside of the EU. He emphasised the economy’s “continued resilience” and the government’s intention to build “a stronger, fairer, better Britain.”

Responding to the budget, DUP MP Sammy Wilson welcomed announcements on broadband and a one-year deferral for the mandating of Making Tax Digital for Business. He raised concerns around increasing National Insurance Contributions from self-employed people and the level of dependence on consumer borrowing. Whilst not supporting all proposals within the budget, he said “there are many areas which are designed to make our economy more competitive and enable us to maximise opportunities outside the European Union.”

Sinn Féin MLA John O’Dowd accused the Chancellor of “dodging the economic catastrophe that is Brexit” and imposing more Tory austerity. Mr O'Dowd reiterated Sinn Féin’s intention to secure ‘special status’ for Northern Ireland post-Brexit.

Ulster Unionist MP Tom Elliott said that upcoming spending decisions make it “vital” that the Northern Ireland Executive “gets up and running.”Failure by the last Executive to agree a budget, he added, creates a great deal of uncertainty for ordinary people.

Alliance Party deputy leader Dr Stephen Farry said the Budget should be a “further reality check” for the political process here. Urging caution around the economic figures, he claimed that they do not reflect the impact of the actual departure of the UK from the EU, nor consider “the disproportionate impact of Brexit economically and financially on Northern Ireland.”