Share Prices & Company Research

News

13 March 2018

Tigger happy: “Light at the end of the tunnel” despite tepid outlook

There were few fireworks for investors and savers, but still the Chancellor of the Exchequer promised “light at the end of the tunnel” as his Spring statement predicted falls in borrowing, inflation and debt.

Despite previously being compared to “Eeyore”, Philip Hammond said he was feeling “Tigger-like” as he began to give a more upbeat statement around the economy than in his Budget of last November.

Economic growth was 1.7% in 2017 according to the Office for Budgetary Responsibility (OBR), higher than forecasts of 1.5%, prompting Mr Hammond to declare: “Forecasts are there to be beaten.” Growth was also forecast upwards for 2018, and unchanged at 1.3% for 2019 and 2020. However, the statement gave a gloomier longer-term outlook, with growth was revised from 1.5% to 1.4% for 2021 and from 1.6% to 1.5% in 2022.

Chris Price, Investment Specialist, said: “As expected it was a rather anodyne statement, with nothing said regarding taxation and spending, which for the general public would have the biggest impact. There was also nothing said, or hinted that there would be forthcoming changes regarding savings and investments. Overall, the main message is that the economy is performing better than expected, although the outlook is still tepid with forecast growth in the early 2020’s still expected to be lower than this year’s estimate.”

Inflation is expected to fall to the Bank of England’s 2% target by the end of 2018, with real wage growth expected to return. Mr Hammond said: “Real wage growth is expected to be positive from the first quarter of 2018/19, and to increase steadily thereafter.”

Mr Hammond also confirmed the tax-free personal allowance – the amount people can earn before paying income tax – will rise to £11,850 in April 2018.

The Pound was lifted by the upbeat forecasts, rising 0.42% against the US dollar to US$1.40 during Tuesday afternoon. However, after an overall upwards trend during the past week, the FTSE 100 dipped following the statement, down around 0.8% at the time of writing.

Ends

Please note, past performance and forecasts are not reliable indicators of future results or performance.
 
Tigger happy: “Light at the end of the tunnel” despite tepid outlook
Newsletter sign up
We use cookies on this site to improve your experience and help us provide you with a better website. An explanation of the cookies we use and their purpose can be found within our Cookie Policy. Your continued use of this site means you consent to the use of cookies.