For someone who goes under the nickname “Spreadsheet Phil”, UK Chancellor Philip Hammond’s first Budget was surprisingly upbeat. Containing only 28 measures compared to 77 within George Osborne’s previous Spring Budget, it was a noticeably slimmed down affair.
The accompanying economic forecasts showed that, in the short term, the UK economy is improving. The Office of Budget Responsibility (OBR) upgraded its growth forecast for 2017 from 1.4% to 2%. But the economy is now expected to grow more slowly from 2018-20. Public sector net borrowing as a proportion of GDP is predicted to fall to 2.6% in 2017 meaning that the UK should meet EU deficit rules for the first time in a decade. And employment has reached a record high of 31.8 million people. Loosening of the purse strings allows a much-needed £2 billion injection into adult health and social care over three years.
However, it wasn’t all good news. Mr Hammond explained that the narrowing of the deficit will only be possible through continuing austerity with significant cuts in public spending per head planned until 2021. And he was accused of reneging on the government’s general election manifesto to lock income taxes, VAT and national insurance, announcing a controversial increase in national insurance contributions for the self-employed. Shareholders will also lose out with a reduction in the tax-free dividend allowance from £5,000 to £2,000 from April 2018.
In other announcements, there will be investment in free schools, technical education for 16-19 year olds and academic research placements in areas including bioscience and biotechnology. Meanwhile, ‘sin’ taxes on beer, wine and cigarettes are set to increase.
Oil prices continued on their descent this week with the US West Texas Intermediate (WTI) benchmark oil price dropping under $50 per barrel for the first time in three months. Brent crude also slipped to its lowest level since last November.
The Organisation for Petroleum Exporting Countries (OPEC) and several large producer nations agreed to cut production in late November, which led to a sharp rise in the WTI at the end of last year. But there has been a large price drop during March on news that inventories of US crude stocks have surged for a ninth successive month, leading to concerns of a supply glut from the revitalised US shale oil market. Some forecasters are now viewing $50 per barrel as a ceiling, rather than a floor.
Car boot sale
PSA Group, which produces Peugeot and Citroën cars, agreed this week to purchase the European operations of General Motors (GM), which includes the Vauxhall and Opel brands for £1.9 billion.
PSA is set to become the second largest car maker in Europe, behind Volkswagen. Meanwhile, GM will focus on US production, a policy that will doubtless please the Trump administration.
UK Business Secretary, Greg Clark, said he was "cautiously optimistic" about the future of Vauxhall, although unions have expressed concerns that PSA will streamline operations and cut costs through plant closures and redundancies.
Attorney Stephen Gutierrez had a baptism of fire in a Miami courthouse this week. The unfortunate incident took place mid-way through his defence of Claudy Charles, a man accused of…arson. The trial was interrupted after Gutierrez ran from the courtroom with smoke emanating from his trousers. Disappointingly, no one is said to have taken the opportunity to shout out “lawyer, lawyer, pants on fire”. The flare-up was blamed on a rogue e-cigarette battery, and according to Gutierrez, was not a bizarre stunt to demonstrate Charles’ defence. Circuit Judge Michael Hanzman fanned the flames further by raising the possibility that Gutierrez will be found in contempt of court.