Top stories

  1. Chancellor delivers Autumn Budget
  2. Help to Buy extended to 2023
  3. EU firms to access UK clearing services

Stat of the day

1.6 per cent – The Office for Budget Responsibility’s forecast for growth in 2019, up from the 1.3 per cent forecasted in March (OBR).

Chancellor delivers Autumn Budget

Philip Hammond, Chancellor of the Exchequer, delivered his Autumn Budget yesterday, declaring that “austerity is coming to an end” as he announced tax cuts and rises in public spending (all outlets). He committed an additional £500 million for Whitehall’s Brexit preparations, stating that next year’s Spring Statement could be upgraded to a full fiscal event if there was no deal (The Times, £, p2, Financial Times, £, p4). Mr Hammond said that the UK would see a “double deal dividend” by securing a positive outcome in the Brexit negotiations (Daily Telegraph, £, p8). However the Office for Budget Responsibility warned that a “disorderly” Brexit “could have severe short-term implications for the economy, the exchange rate, asset prices and the public finances” (ITV News).

Mr Hammond also announced that a new digital services tax will be introduced by 2020, bringing in a levy on UK-generated revenues on profitable internet firms with revenues over £500 million. It is expected to raise £400 million (The Guardian, p7). However, the Daily Telegraph (B1, £, online) quotes concerns from TechUK that the tax may “undermine the UK’s reputation as the best place to start a tech business or to invest”.

Alongside the Budget documents, HM Treasury also published the final report of the Cryptoassets Taskforce, announcing a consultation in early 2019 on the regulation of exchange tokens and related firms such as exchanges and wallet providers. The Financial Times (£, online only) reports the Financial Conduct Authority will consult on banning the sale of derivatives based on cryptocurrencies to retail investors.

The Autumn Budget also included a package of measures to help people with problem debt, including a plan to extend “breathing space” to 60 days and offer interest-free loans (The Times, £, Budget p5).

Help to Buy extended to 2023

The Help to Buy scheme will be extended for two years until 2023, the chancellor announced in the Budget yesterday (Daily Mail, p14). The extension was part of a series of announcements aimed at improving the housing market, which also included the abolition of stamp duty for all first-time buyers of shared-ownership properties worth up to £500,000 and will be backdated to the last Budget (Daily Telegraph p6, print only).

A review by Sir Oliver Letwin, published at the same time, did not find evidence of land-banking by large housebuilders but “urged ministers to take more active steps to ensure land with planning permission gets developed more quickly” (Daily Telegraph, £, B4).

Jackie Bennett, Director of Mortgages at UK Finance, said:

“The extension of Help to Buy is good news for first-time buyers with low deposits, who will continue to receive vital support when buying a new-build home until 2023.

“Last year the number of first-time buyers reached its highest level in a decade, boosted by vital schemes like Help to Buy.

“Today’s announcement provides further clarity and will bring welcome certainty to the new-build housing and mortgage market. Alongside the stamp duty exemption for first-time buyers on shared ownership properties up to £500,000, this measure will help even more people get a foot on the housing ladder in the years ahead.”

EU firms to access UK clearing services

European companies will still be able to use derivative clearing services in the UK even in the event of a no-deal Brexit, Valdis Dombrovskis, European Commission vice-president, has said (Financial Times, £, online only). Current EU regulations prevent firms based in the bloc from using clearing houses situated outside, however Mr Dombrovskis said that, on a short-term basis, firms would still be able to access London’s capital markets if no deal was made. The Financial Times said that the arrangement “would also be linked to the UK’s willingness to stick close to EU regulatory and supervisory standards”.

Meanwhile it is reported that the UK has so far only “rolled over” 14 of the 236 treaties the EU has signed with overseas countries (Financial Times, £, p22). Covering arrangements including trade and industries such as financial services, the treaties are with 168 countries around the world. Number 10 said: “We are working closely with partners to replace the agreements in the event of no deal.”

Latest from UK Finance

The FCA is changing how it regulates individuals at the firms it authorises. Nik Kiri and Julia Dixon (Linklaters LLP) explore this change.

News in Brief

Annual growth in consumer borrowing, including personal loans, credit cards and car loans, fell to 7.7 per cent in September, the lowest level in over three years (The Guardian, p28).

A record 4.1 million complaints were made to banks and building societies in the first six months of 2018, according to figures from the Financial Conduct Authority published yesterday (The Times, £, p36).

Global investment into research and development in the UK has increased by 10.7 per cent this year, up by an extra £3.5 billion, according to a report by PwC (Daily Telegraph, £, B9).

A 0.2 per cent rise in US inflation has increased the chances of the Federal Reserve raising interest rates in December (The Times, £, p38).

What the commentators say

The Financial Times’ (£, p14) columnist Martin Wolf writes that the Office for Budget Responsibility’s report on the state of the British economy and public finances, published yesterday alongside the Chancellor’s Annual Budget, offered encouraging employment figures, but disappointing GDP and productivity growth forecasts. Wolf notes that despite sluggish growth – 1.3 per cent in 2018 – Philip Hammond was able to perform the “largest discretionary fiscal loosening since 2010”, thanks to the public finances performing better than previously expected.

Writing in The Times, columnist James Ashton asks should companies help their employees with housing? Drawing upon the tradition of the benevolent business magnates of the late 19th century who would build model towns for their workers, Ashton wonders whether a modern company could benefit from a similar initiative, albeit on a more modest scale (The Times, p39, £).

News in brief – 30 October 2018