March 8, 2017 / 12:47 PM / 8 months ago

Hammond delivers annual budget to parliament

LONDON (Reuters) - Chancellor Philip Hammond delivered his annual budget statement to parliament on Wednesday. Below are highlights from the speech:

Britain's Chancellor of the Exchequer Philip Hammond stands outside 11 Downing Street before delivering his budget to the House of Commons in London, March 8, 2017. REUTERS/Stefan Wermuth

ON THE BRITISH ECONOMY

“As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future; It provides a strong and stable platform for those negotiations.”

“As we prepare for our future outside the EU we cannot rest on our past achievements; We must focus relentlessly on keeping Britain at the cutting edge of the global economy. The deficit is down, but debt is still too high. Employment is up, but productivity remains stubbornly low.”

OBR FORECASTS

”The OBR forecast the level of GDP in 2021 to be broadly the same as at Autumn Statement.

”Reflecting the recent strength in the economy, the OBR has upgraded its forecast for growth this year from 1.4 percent to 2 percent. In 2018 growth is forecast to slow to 1.6 percent, before picking up to 1.7 percent, then 1.9 percent, and back to 2 percent in 2021.

”The number of people in employment is set to grow in every year, with a further two-thirds of a million people in work by 2021.

“The OBR forecast inflation at 2.4 percent this year. Then 2.3 percent next year and 2 percent in 2019. And most importantly ... despite higher-than-target inflation, real wages continue to rise in every year of the forecast.”

ON DEBT

”Overall public sector net borrowing as a percentage of GDP is predicted to fall from 3.8 percent last year to 2.6 percent this year.

“Borrowing is then forecast to be 2.9 percent in 17-18 and then to fall over the remainder of the Parliament, to 1.9 percent in 2018-19, then 1 percent; and 0.9 percent, before reaching 0.7 percent in 2021-22 – its lowest level in two decades.”

ON SPENDING

”Some have argued that lower borrowing this year makes a case for more unfunded spending in the future. I disagree. Britain has a debt of nearly 1.7 trillion pounds almost 62,000 pounds for every household in the country.

”Each year, we are spending 50 billion pounds on debt interest – more than we spend on Defence and Policing combined. And borrowing over the forecast period is still set to be 100 billion pounds higher than predicted at Budget 2016.

“So the only responsible course of action, Mr Deputy Speaker, is to continue with our plan.”

ON RATE CUTS FOR PUBS/ SMALL BUSINESS

“Recognising the valuable role that local pubs play in our communities, I will provide a 1,000 pound discount on business rates bills in 2017 for all pubs with a Rateable Value of less than 100,000 pounds – that’s 90 percent of all pubs.”

“Any business coming out of Small Business Rate Relief will benefit from an additional cap. No business losing small business rate relief will see their bill increase next year by more than 50 pounds a month.”

CHANGES TO TAXATION FOR SELF-EMPLOYED

”The difference in National Insurance Contributions is no longer justified by the difference in benefits entitlement. Such dramatically different treatment of two people earning essentially the same undermines the fairness of the tax system.

“The main rate of Class 4 NICs for the self-employed will increase by 1 percent to 10 percent, with a further 1 percent increase in April 2019.”

CHANGES TO DIVIDEND ALLOWANCE

“The Dividend Allowance has increased the tax advantage of incorporation. It allows each Director/Shareholder to take 5,000 pounds of dividends out of their company tax free, over and above the personal allowance. It is also an extremely generous tax break for investors with substantial share portfolios.”

PERSONAL TAXES

”The personal allowance will rise for the seventh year in a row to 11,500 pounds and the higher rate threshold to 45,000 pounds (and) 29 million people will be better off, with a typical basic rate taxpayer paying 1,000 pounds less than in 2010.

“We will meet our manifesto commitment to increasing the thresholds to 12,500 pounds and 50,000 pounds respectively by the end of this Parliament.”

Reporting by Kate Holton and Elisabeth O'Leary

Our Standards:The Thomson Reuters Trust Principles.
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