Wednesday, 22nd November: UK Chancellor Philip Hammond stepped in to the spot light just after lunch today to deliver the first Budget speech since the UK voted to leave the EU. Without going in to full detail of what Hammond delivered in his lengthy speech, we will highlight a couple of notable features:
- Stamp duty for first time buyers is to be slashed for properties worth up to £300k, although if you live in London and other “expensive areas”, the first £300k of a £500k purchase will be exempt from stamp duty, with the remaining £200k incurring 5%. The reduction is set to apply immediately in England, Wales and Northern Ireland while the Scottish government will have to decide whether it follows suit too.
- Continuing to help the young who shunned May as she lost her Conservative party’s majority in this year’s snap election, 26-30 year olds will be entitled to a third off rail travel, with the card costing £30 a year.
- The tax-free personal allowance will rise to £11,85 from April 2018. Higher rate tax payers’ threshold will rise to £46,350. The National Living Wage will rise in April 2018 from £7.50 to £7.83.
- The price of a 20 pack of cigarettes will rise by c.28p as tobacco continues to rise by 2% above RPI inflation.
- £3bn has been earmarked for Brexit negotiations, aimed at being prepared for every possible outcome as the Brexit divorce settlement continues.
Elsewhere, the rate of growth in the UK has been cut by the Office for Budget Responsibility; the growth forecast for 2017 has been downgraded from 2% to 1.5%. The downgrades continue with growth anticipated to be at 1.3% by 2020 (down from 1.7%) before rising to 1.5% in 2021.
Equity markets in the UK pared back from intra-day highs, closing in the green as slight foreign exchange movements earlier in the day subsided. Many of the big risers on the index were buoyed from broker upgrades. GBP/USD is +0.3% as we speak as it looks to its 7th day of gains. US indices have also slipped back from further record highs as they come to the end of their short week before Thanksgiving tomorrow.