LONDON (Reuters) - Chancellor Philip Hammond delivered his annual budget statement to parliament on Wednesday.
Below are highlights from the speech:
“The negotiations on our future relationship with the EU (European Union) are in a critical phase. We are determined to ensure that the country is prepared for every possible outcome (on Britain’s exit from the EU).
“We have already invested almost 700 million pounds in Brexit preparations (… ) and today I am setting aside over the next two years another 3 billion pounds.”
“The OBR (Office for Budget Responsibility) now expects to see gross domestic product (GDP) grow 1.5 percent in 2017, 1.4 percent in 2018, 1.3 percent in both 2019 and 2020, before picking back up to 1.5 percent, and finally 1.6 percent in 2022.”
“I welcome the OBR forecast that there will be another 600,000 people in work by 2022.”
“At this budget, we choose a balanced approach. Yes maintaining fiscal responsibility, as we at last see our debt peaking.
“I am pleased to tell the house that the OBR expects debt to peak this year and then gradually to fall as a share of GDP.
“Debt will peak at 86.5 percent of GDP this year; it will then fall to 86.4 percent next year; then 86.1 percent; 83.1 percent; 79.3 percent, and finally 79.1 percent in 2022-23, the first sustained decline in debt in 17 years.”
“Regrettably our productivity performance continues to disappoint. The OBR has assumed at each of the last 16 fiscal events that productivity growth would return to its pre-crisis trend of about 2 percent a year, but it has remained stubbornly flat.”
“We took over an economy with the highest budget deficit in our peacetime history. Since then, thanks to the hard work of the British people that deficit has been shrinking.
“As a percentage of our GDP (borrowing) falls from 2.4 percent this year, to 1.9 percent next year; then 1.6 percent; 1.5 percent; 1.3 percent; and finally, 1.1 percent in 2022-23.
“Borrowing is forecast to be 49.9 billion pounds this year; 8.4 billion pounds lower than forecast at the Spring Budget. And after taking account of all decisions since the Spring Budget, the OBR’s GDP revision, and the measures I will announce today borrowing will fall in every year of the forecast from 39.5 billion pounds next year to 25.6 billion pounds in 2022-23 to reach its lowest level in 20 years.
“The OBR forecast the structural deficit to be 1.3 percent of GDP in 2020-21, giving 14.8 billion pounds headroom against our 2 percent target.”
“We understand the frustration of families where real incomes are under pressure.
“As well as making work pay we want families to keep more of the money they earn. When we came into office the personal allowance stood at 6,475 pounds. From April, I will increase the personal allowance to 11,850 pounds and the higher (income tax) rate threshold to 46,350 pounds.”
“For all first-time buyer purchases up to 300,000 pounds, I am abolishing stamp duty (tax levied when a house is purchased) altogether.”
“Solving the housing challenge takes more than money, it takes planning reform. We will focus on the urban areas where people want to live and where most jobs are created making best use of our urban land and continuing the strong protection of our green belt in particular, building high quality, high density homes in city centres and around transport hubs.”
“From April 2018 the first year vehicle exercise duty (VED) rate for diesel cars that don’t meet the latest standards will go up by one band and the existing diesel supplement in Company Car Tax will increase by 1 percentage point.”
“I will, once again, cancel the fuel duty rise for both petrol and diesel that is scheduled for April.”
“From April 2019, I will again freeze short-haul Air Passenger Duty rates and I will also freeze long-haul economy rates paid for by an increase on Premium class tickets and on private jets.
“Recognising the pressure on household budgets, and backing our Great British pubs, duties on other ciders, wines, spirits and on beer will be frozen. This will mean a bottle of whisky will be 1.15 pounds less in 2018 and a pint of beer 12 pence less.”
“With (...) the environment (minister) I will investigate how the tax system and charges on single-use plastic items can reduce waste.”
“I am (..) exceptionally, and outside the spending review process, making an additional commitment of resource funding of 2.8 billion pound to the National Health Service (NHS) in England, 350 million pounds immediately to allow trusts to plan for this winter and 1.6 billion pounds in 2018-19, with the balance in 2019-2020, taking the extra resource into the NHS next year to 3.75 billion pounds in total”
“There is a case now for removing the anomaly of the indexation allowance for capital gains – bringing the corporate system into line with personal capital gains tax. I will therefore freeze this allowance so that companies receive relief for inflation up to January 2018, but not thereafter.
“I will accept the representation of the British Chambers of Commerce, Confederation of British Industry (CBI) and other business organisations and bring forward the planned switch from Retail Price Index (RPI) to Consumer Price Index (CPI) by two years, to April 2018, a move worth 2.3 billion pounds to businesses over the next five years.”
ON VALUE-ADDED TAX:
“From April 2019, and in accordance with our international obligations, we will apply income tax to royalties relating to UK sales when those royalties are paid to a low tax jurisdiction even if they do not fall to be taxed in the UK under our current rules, raising about 200 million pounds m a year
“We are also taking further action to address online VAT fraud which costs the taxpayer 1.2 billion pounds per year”
“We’ll increase the main (Research and Development) Tax credit to 12 percent (from 11 percent), taking the first strides towards the ambition of our industrial strategy.”
Reporting by Sarah Young and Kate Holton; writing by Elisabeth O'Leary