Britain has seen some famous fiscal events over the years. From Hugh Gaitskell introducing charges on dental work and glasses in 1951 (triggering Nye Bevan’s resignation) to Sir Geoffrey Howe hiking taxes in the teeth of the 1981 recession or Gordon Brown announcing £40bn of fresh NHS funding in 2002, chancellors have made the political and economic weather at the dispatch box.
But not today. Instead, Philip Hammond’s Spring Statement is likely to be more of a fiscal non-event.
For a start, it’s not a full budget – more like an update on the nation’s financial health.
Secondly, it’s being overshadowed the full-blown Brexit crisis raging, now that MPs have rejected Theresa May’s deal again.
So Hammond’s performance will be more like a palate cleanser, between last night’s Meaningful Vote and a new vote tonight on whether to rule out leaving the EU without a deal. Theresa May and Jeremy Corbyn will further steal the limelight when they clash at PMQs at noon, before the chancellor speaks.
But what can we expect?
Hammond will give MPs the latest growth forecasts. The independent Office for Budget Responsibility may have downgraded its view of 2019, given the recent global slowdown. In October 2018, they projected 1.3% growth for 2018 — but just last week, the OECD said growth will slide to just 0.8% this year.
But the OBR could also bring good news — the UK may need to borrow less than previously expected, thanks to bumper tax receipts in January.
That means Hammond’s “Brexit war chest” – money set aside to protect the economy if a no-deal Brexit occurs – may have swelled from £15bn close to £20bn.
The chancellor is expected to tell Parliament that this goody bag could be used on urgent priorities such as schools and hospitals, as long as Britain doesn’t crash out of the EU (something to concentrate MPs minds ahead of tonight’s vote).
The statement may also announce some new consultations into the issues facing Britain (productivity problems and climate change, perhaps), or an update on Hammond’s Digital Services Tax.
But more wide-ranging changes to tax and spending plans, to reverse the impact of years of painful austerity, must probably wait for another day.
- 12.30pm GMT: Philip Hammond delivers the Spring Statement
- 1.30pm GMT (estimate): OBR publishes its Economic and fiscal outlook