On Tuesday, Phillip Hammond made his 2018 Spring Statement, looking ahead over the coming years with quiet confidence. Mr Hammond described himself as “positively Tigger-like” as he presented his forecasted figures and went as far as to claim the country had reached “a turning point”, with public debt forecast to start falling in the coming years despite Brexit looming large on the horizon.
Tuesday’s forecasted growth came as a welcome surprise to many who have seen the UK economy growth shrink to the second lowest in the G7, only narrowly ahead of Italy. However, whilst predicted growth increase by 0.1%, to 1.5% for 2018, there was a more negative long term forecast, with growth expected to remain exceptionally low at just 1.3% well into 2020.
There was more positive news when it comes to the UK deficit. Mr Hammond forecast borrowing of £45.2bn in 2017-18, which is actually revised down from an expected £49.9bn. That is equivalent to 2.2% of GDP, with the reduction largely due to an increase in income tax generated by near record lows of unemployment. Phillip Hammond even went as far as describing the reduction as “a turning point in this nation’s recovery”.
Despite that decrease in borrowing, which is expected to be sustained through to 2022-23, according to the .gov.uk website, “the UK’s debt remains too high, equal to around £65,000 per household. This makes the economy vulnerable to future shocks. It also imposes a significant burden on future generations.”
The .gov.uk website published strong employment figures to back up Phillip Hammonds spring statement, which helps show the strength of the UK’s recruitment industry as a whole:
“Employment has increased by 3 million since 2010, which is the equivalent of 1,000 people finding work every day. The unemployment rate is close to a 40-year low. There is also a joint record number of women in work – 15.1 million. The OBR predict there will be over 500,000 more people in work by 2022.”
Conspicuous by its absence was the government’s planned consultation on IR35 legislation, an issue which will dictate the employment status and practises of many across the recruitment industry in the years to come.
Tom Hadley, Recruitment & Employment Confederation (REC) Director of Policy said: “It’s encouraging that the government has so far not brought forward a consultation on IR35 in its spring statement. We hope that the government is instead focussing on a more holistic approach to employment status, tying into recommendations from the Matthew Taylor review.”
Martin Shaw, Financial Director at Neuven Solutions, commented “ The Spring Statement 2018, although cautiously optimistic on many aspects, was tinged with negativity around the future growth of the UK economy. The statement itself, as it wasn’t a financial statement, didn’t help to tackle huge problem areas in the UK, especially around public spending and the social care sector. What it does do, is open up an opportunity for the chancellor in his autumn statement to give the UK recruitment as well as the care industry a huge boost, heading into 2019, with room in the budget to increase public sector spending and investment in the UK labour force.
Neuven have noted that the IR35 consultation has not been brought to the table as previously suggested and are glad that the government are choosing to take their time on this area of legislation. This is an area which will cause a lot of uncertainty for a huge number of companies across the UK and needs to be done correctly. To do that, the government needs to take learnings from the public sector roll out in 2017, and put together a well through out road map looking towards 2019. This is an area that cannot be rushed and must be right first time around.”