Branded an “uninspiring budget” by Premier Asset Management’s CIO Neil Birrell, Wednesday’s speech was chock full of announcements and measures largely pre-empted in the run up to the big day.
While scrapping stamp duty will grab headlines, people cheer the freeze on some alcohol duties and Labour claim all of the policies were theirs to start off with, the damning downgrade of economic growth should not be brushed off.
The OBR slashed expectations for growth this year from 2% to 1.5%, and added the future hardly looked bright.
“The persistence of weak productivity growth does not bode well for the UK’s growth potential in the years ahead,” it said in a report published Wednesday.
While its expectations on the debt level have improved, one hopes the government is not sacrificing the UK’s future economic prospects to score a political point on the deficit.
Growth prospects bleak
The OBR’s forecast were the stand-out takeaway for Liontrust’s John Husselbee, who found no other reason to adjust asset allocation from the budget itself.
The head of multi-asset said the UK’s poor growth prospects were in total contrast to the rest of the world.
All 45 countries tracked by the OECD are on track to grow in 2017 and two-thirds have been accelerating since 2016, Husselbee said.
“The fact the UK is among the few decelerating economies perhaps indicates headwinds caused by the Brexit-shaped elephant in the room and, like everyone, I am keen for that situation to be resolved as soon as possible.”
Premier’s Birrell agreed the outlook was dire.
“The downgrades to economic growth and productivity are significant and are symptomatic of the fragility of the economy and there is little promise of improvement, although the forecast reduction in debt is positive,” he said.
As the first item on the so-called Budget-speech agenda, it’s highly possible that the gloomy predictions for the UK’s future could be drowned out by the flashier policies outlined by the Chancellor.
Quilter Cheviot’s head of fixed interest research, Richard Carter, said: “The Chancellor will hope that his measures for the housing market makes the headlines, rather than the downgrades to economic growth.”
Of those who haven’t already had their head turned by some policies, it may well be those left simply don’t want to listen to the gloomy “long, economicky” words, as Hammond (pictured) put it himself.
Despite what Hammond might claim about righting the so-called wrongs of the Labour past, the UK is now seven years in to a Conservative government. Growth is bleak, people are not happy, the Tories are pulling themselves apart and this budget has done nothing to change that.
