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Schroders: UK Spring Budget 2017: No time for complacency ahead of tricky two years

Spring budget for Financial Advisers and Paraplanners

9 Mar 2017

Schroders: UK Spring Budget 2017: No time for complacency ahead of tricky two years

No alarms and no real surprises from Chancellor of the Exchequer Philip Hammond as he seeks a firm fiscal footing ahead of a crucial period.

It was pleasing to see the Chancellor stick to his "no surprises" mantra and stress the importance of avoiding complacency in what was the UK’s final Spring Budget. Ahead of Theresa May activating Article 50 and what could potentially be a tricky two years of negotiations with the EU, it is crucial that the UK is on as sound a fiscal footing as possible, and is not distracted by any unnecessary budget gimmicks. Even though the UK economy has performed robustly following the UK’s vote to leave the EU it is good to see the Chancellor exercising fiscal prudence.

It will also be reassuring that the Chancellor has opted not to increase spending despite borrowing coming in lower than expected, particularly if the Brexit talks prove particularly difficult and start to impact on economic growth. Notably, the Chancellor has moved to address the tax discrepancies that exist between employees and the self-employed. This could act as an extra avenue of tax receipts with the Chancellor having very little wriggle room to boost any other areas. But, at the same time, it is crucial that this is not to the detriment of the growth and innovation of what is, in large parts, a burgeoning sector, as displayed by the growth of the "gig economy".

Overall, the Chancellor has delivered generally what the UK could have hoped for, buoyed by good GDP and fiscal news. But with the hard work and uncertainty of the Brexit negotiations soon to begin, it is important to not get carried away.

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Important information For professional advisers only. This material is not suitable for retail clients.  Past performance is not a guide to future performance and may not be repeated.  The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.  Schroders has expressed its own views and these may change. The data contained in this document has been sourced by Schroders and should be independently verified before further publication or use. The forecasts included should not be relied upon, are not guaranteed and are provided only as at the date of issue.  Our forecasts are based on our own assumptions which may change.  We accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to our assumptions or forecasts.  Forecasts and assumptions may be affected by external economic or other factors. Issued in March 2017 by Schroder Unit Trusts Limited, 31 Gresham Street, London EC2V 7QA. Registered No: 4191730 England. Authorised and regulated by the Financial Conduct Authority.

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