UK chancellor Philip Hammond has set out the Spring Budget, the government's last Budget before beginning the process to leave the EU. FT writers give their verdict on what it means for the economy, investors and politics.
Produced by Vanessa Kortekaas. Filmed by Nicola Stansfield and Petros Gioumpasis. Additional footage by Reuters.
The Chancellor of the Exchequer, the right honourable Philip Hammond.
I report today on an economy that has continued to confound the commentators with robust growth, a labour market delivering record employment, and a deficit down by over 2/3.
This was the last budget before Britain formally notifies the EU that it intends to leave. And the good news for Philip Hammond was that the economy hasn't performed really badly over the past three months. In fact, it's pretty much identical when you get to the end of the forecast period in 2021. In the short term, very good news. Growth up to 2% in 2017. Public finance is a lot better. The years after that are a bit worse than they were. So it balances out in the long term.
The biggest measure was an attempt to bring more fairness to the tax system between employees, the self-employed, and owner-managers, with the self-employed having to pay more national insurance from next year, and owner-managers paying greater taxes, particularly on the dividends they pay themselves.
This wasn't meant to be a radical budget. It wasn't meant to have too many things to rock the boat. But there's one thing in it which potentially causes a bit of a rebellion amongst Tory MPs, and that's a rise in national insurance for workers earning about 60,000 pounds a year or more. Self-employed workers that goes against a manifesto commitment by the Tories. And it will be picked up on by both moderate Tories who aren't so aligned with Theresa May, and also by labour politicians. Unfortunately, Jeremy Corbyn, the labour leader, didn't actually mention it in his response to the budget.
So the biggest surprise for investors in today's budget was the reduction in the tax-free dividend allowance. Now, George Osborne set this up, so it had been in place for around a year, giving you a tax-free slab of 5,000 pounds that you can have the tax-free dividend if you're an owner of a company, or if you're just an investor, you have shares in a company held out with the tax-efficient [INAUDIBLE] structure. So from next April, 2018, that's going to be cut right down to 2,000 pounds worth of tax-free allowance.
So lots of reasons we'll probably be upset about that. However, they'll be less upset that there is absolutely nothing at all in the chancellor's announcement today about changes to the way pensions will be taxed, which more wealthy people have been a lot more worried about. However, don't know what he's going to do in the autumn. So watch this space.