Chancellor Philip Hammond described himself as ‘Tigger-like’ but will his statement leave you feeling bouncy too? Here's your roundup of the highlights
Earlier today the Chancellor Philip Hammond stood up in parliament to deliver his Spring Statement on the state of the UK’s finances.
It's been a tough few years for the UK but overall it looked to be relatively good news for the economy. Hammond began his statement in a pretty upbeat mood, describing himself as ‘Tigger-like’ as he announced that the predictions for the UK's economic growth, borrowing and inflation were all looking better than previously expected.
Now, that’s all well and good, but how does all this talk about the economy really affect you? We’ve delved behind the headlines to cut through the politics and look at what the announcements in the Spring Statement really mean for you and your wallet, both now and in the future.
Hang on, what's the Spring Statement all about?
The message we received relentlessly in advance of today’s statement was that this wasn't going to be a Budget; there would be no spending hikes or tax changes and no big policy announcements.
Instead, we were promised a speedy statement that would lay out our financial situation as a country and where we are going in the future. This helps to predict what's going to happen when the Autumn Budget (the big financial event of the year) rolls around. Getting to grips with what was said today can help you get ahead of the game and prepare for the future.
And it may not have sounded like it if you watched along on TV, but today’s speech did actually contain some good news and important information for your finances.
What it means for your money
There is light at the end of the tunnel, it seems, but you might be a little surprised at how long that tunnel is.
Hammond announced that wages will begin to see real rises but not until the first three months of next year, according to official predictions. That does, however, rely on inflation falling, which luckily is expected to happen over the next 12 months.
This will be a welcome relief for workers who have faced stagnant wages and a freeze on in-work benefits, despite rising prices, for quite a while.
Household earnings have fallen far behind inflation, which is currently at 3%. That means that as a nation we have been getting progressively poorer. But this new prediction means that everyday prices should stop going up as quickly. This means the increasing costs of your daily life should also begin to ease and so your wages will go further and buy more.
At times, Hammond’s speech was so upbeat that you could be forgiven for thinking austerity was all but over. Yet he has been criticised by many for focusing too much on the larger economic outlook and ignoring the struggles of those managing on extremely tight incomes.
Hannah Maundrell, editor of the website Money.co.uk, said: “The chancellor put a positive spin on the future of our economy, but his focus was very much on the big picture. The pressures of day to day living aren’t so encouraging for the many households struggling to get by.”
And in terms of the literal money in your pocket, Hammond has revealed he intends to review the role of cash, causing some people to question whether the end is in sight for 1p and 2p coins.
What it means for housing
The shortage of new homes, particularly affordable and social housing, has been a real thorn in the side of this government so Hammond was no doubt pleased to have some good news on that front.
He revealed a deal with the West Midlands for an extra 215,000 new homes to be built by 2030-31. And for the capital, he pledged money for 27,000 more affordable homes in London. The chancellor also pledged to boost support for small house-builders, more than doubling the housing growth partnership to £220m.
That’s good news for struggling buyers who are contending with record lows in terms of available housing.
However, there was little in the statement to tackle issues such as affordability or rising rents. Again, perhaps this will be addressed in the Autumn Budget but in the meantime there will be little change.
What it means for the environment (and your coffee cups)
There has been a lot of speculation that the government will bow to pressure from campaigners and consider introducing a new tax or other penalty on single-use plastics like drinking straws and coffee cups. Some pressure groups have even been demanding a 25p tax a time on single-use coffee cups.
He didn’t launch any new measures today but he did call for evidence on ways to tackle plastic waste, including through the tax system. He also put forward a pledge to help universities and business push forward with green innovations.
It seems likely that there will be a more definitive response in this year’s Autumn Budget so hopefully this statement is good news for the environment. Watch this space.
What it means for your online shopping habit
Hammond revealed plans to crack down on businesses masquerading as individuals when selling online. They do this to avoid paying taxes like VAT and the government has had concerns about the amount of money being lost this way. The money from business taxes gets ploughed back into the economy and public services that we use every day, so it's definitely not great when it goes missing.
The government is now going to consult on how to deal with this shortfall and it’s been suggested that online sellers may have to pay VAT and then claim it back if they are eligible.
Whatever happens, it is likely to cost some sellers more and that could lead to a rise in online prices.
What it means for young people
Despite saying there wouldn't be, there were some spending pledges in today’s speech and they mostly targeted younger workers.
There will be £80m more spent supporting small businesses to engage apprentices, and Hammond confirmed that £500m will be spent developing so-called ‘T Levels’.
With qualifications in digital, construction, education and childcare, these 'T levels' are intended to help the country boost its home-grown talent when they are properly launched in 2020.
What it means for Brexit
There was also mention of how much our Brexit 'divorce bill' is going to be. Over £37 billion to be precise.
While this won't be coming directly out of your pockets it's a timely reminder that we're still living in uncertain times. The true impact of Brexit won't be clear for a while.
This means there's no better time to make sure you've got a financial security net in place so that you're prepared for whatever happens in the future.
What it means for borrowing
Around the time of the financial crisis we heard lots about this thing called the 'government deficit'. This basically meant that the government was spending more money than it had. Essentially it was in debt, just like anyone is if they spend more than they have. As a result, they were having to borrow a lot of money. This isn't necessarily always a bad thing, but when the government has a more balanced account it can be more sustainable in the long run. Especially when it comes to dealing with anything unexpected.
Hammond began his statement in a pretty upbeat mood, describing himself as ‘Tigger-like’ compared to the supposed 'Eeyores' in the Labour party. And part of the bounce in his tail is down to the fact that a small surplus (where the government will be getting more money than it spends) has been forecast for 2018-19.
The deficit can be hard to get your head around, but essentially this government has always been adamant that they would be cutting spending until it feels that our borrowing is under control. Hammond emphasised that the government wants to remain cautious, but his bouncy approach showed the government are feeling positive about their borrowing and spending levels. So there could actually be good news ahead. But we won't know until the budget in the Autumn if any of this will be put back into the economy.
What it means for public services
If you’re worried about strained public services then Hammond’s tone was upbeat but stopped short of any immediate promises to relax the purse strings for the stretched public sector.
Laith Khalaf, senior analyst at Hargreaves Lansdown, commented: “Philip Hammond is feeling particularly Tigger-like apparently, but there’s no honey today for public services, more a hint of some honey tomorrow in the Autumn Budget later this year.”
We’ll bring you more news on that honey or lack of it when Hammond delivers his full Budget later this year. However, so far few analysts are expecting a spending splurge anytime soon from the man they call Spreadsheet Phil.
But the positivity when talking about borrowing did suggest that there could be plans to increase spending on things like the NHS, schools, and infrastructure in the Autumn Budget.