The last March Budget – in like a lion, out like a lamb
Colliers reacts to today's Spring budget
Walter Boettcher, Chief Economist at Colliers International said: “Despite great expectations, the Chancellor looks to have lived up to his reputation as ‘Spreadsheet Phil’. There was much attention to mathematical detail, but no obvious Osborne style ‘rabbits out of hats’. Despite a great opportunity to redress the rating issue, ‘in due course’ was the mantra; that is, not anytime soon. As far as we are concerned, it was too little, too late.
“The most worrying element of the Budget was the OBR assumptions upon which it is based; I think they look overly optimistic.The OBR forecast of relatively benign inflation and robust real wage growth is hard to fathom especially given the likelihood US rate hikes and further sterling weakness. In December, real wage growth fell to a 0.2% year-on-year rate. Given recent weakness in retail sales, several observers have feared that imported inflation is weakening wage growth and household spending potential. Household spending is the foundation of the UK economy.
“Despite these fears and the role that house prices play in supporting spending, it is surprising that no new initiatives were announced to support the housing market. This is despite evidence that the present SDLT regime is inhibiting market movement and that tax revenues in the top tax bands are falling. If the OBR forecasts do not unfold as foreseen and the housing market falters, the Autumn budget in 2017 could be a more earnest affair.
“Regional development appears to still be on the agenda, although the approach may be changing, especially since the original proponents Osborne and Heseltine have now both been side lined. The idea of a central government Midlands Engine strategy seems at odds with devolution and local determination of economic policies. There is evidence that devolved funding will continue as well as support for infrastructural linkages as well as commitments to several technical and educational funding initiatives. Let’s see what the local mayoral elections in May bring and especially the extent of local input into the Midlands Engine document."