As Parliament prepares for a no deal Brexit vote, the Chancellor presented the Spring 2019 Financial Statement – the most interesting announcement being that the Government are consulting on whether to scrap copper coins (1p and 2p) and £50 notes! For a fuller picture, read our summary:
The growth forecasts for this year have been downgraded to 1.2% from 1.6% in last year’s budget, with growth now expected it to increase further to 1.4% in 2020 and 1.6% in 2021. Despite the Brexit uncertainty and ongoing negotiations, the economy remains robust and has defied expectations.
This year borrowing forecast is £3 billion lower than before and expected to be at £29.3 billion in 2019-20 and £21.2 billion in 2020-21. Of course the Chancellor has said that these figures are expected to be met if Britain leaves the EU with a deal, whereas this could well change in the event of a messier Brexit split. The Debt is forecast to be at 82.2% as a share of GDP in 2019-20 and fall to 79% in 2020-21.
The government will be reviewing its spending this summer to be concluded before the autumn budget. However, it was announced that there will be an extra £3 billion funding for affordable homes to deliver 30,000 new homes. Depending on the outcome for Brexit these policies and projections may change as the Chancellor did affirm that by avoiding a no deal Brexit we would be able to build a stronger economy. Indeed he implied that there could be a “deal dividend” of around £26bn boost to spending if a successful Brexit deal is concluded.
As previously suggested by the Chancellor when he moved the main Budget to the autumn, this statement was very much a national finance update, and no real fiscal policy changes were announced. We await more meaningful policy moves in the autumn and will update our clients accordingly as and when things change. In the meantime we will of course be continuing to monitor Brexit developments over coming days and weeks and will be managing our portfolios appropriately as things develop (or fail to, as the case may be).