Chancellor Philip Hammond delivers last ever Spring Budget

Hammond delivers his first budget, and the final Spring Budget. Office for Budget Responsibility increases UK growth forecast from 1.4% to 2% in 2017, reflecting unexpected resilience from British economy since Brexit vote. Forecasts for 2018, 2019, 2020 all lower than previous estimates. Corporation tax set to fall to 17% by 2020. National debt forecast to rise to 86.6% of GDP, but planned borrowing cut by £23.5 billion over coming five years. £2 billion in additional grant funding for social care announced over three years.

LONDON – Chancellor Philip Hammond is in the process of delivering his first budget to the House of Commons.

Hammond, who became chancellor last July, stepped up to the dispatch box in Parliament just after 12.30 p.m. GMT (7.30 a.m. ET) on Wednesday to give his first formal budget speech. It is not his first fiscal policy statement, however – he delivered one Autumn Statement in late November 2016.

The budget will be the last to be held in the spring, before it is moved to the autumn.

“We are building the foundations of a stronger, fairer, and more global Britain,” Hammond told the Commons. “Our task today is to prepare Britain to take the next steps for a global future.”

Hammond confirmed that the independent Office for Budget Responsibility has increased the UK’s predicted GDP growth in 2017 from 1.4% in November to 2% today. In 2018, the OBR’s forecast stands at 1.6%. GDP growth will increase to 2% by 2021.

The OBR’s forecast for inflation in 2017 is 2.4%, lower than the 2.8% figure forecast by the Bank of England. Inflation will remain broadly unchanged at 2.3% in 2018, before hitting the bank’s official target of 2% in 2019.

The budget confirmed that corporation tax rates in the UK will continue to fall in coming years. “From April this year, it [Corporation Tax] will fall to 19%, the lowest rate in the G20. In 2020 it will fall again to 17%,” Hammond said.

Alongside changes to the structure of corporation tax, Hammond announced a planned crackdown on those avoiding tax, saying that the government aims to raise an extra £820 million by doing so.

A further review of the way business tax rates are levied will be carried out, Hammond said, following strong opposition to earlier reforms. Three new measures will be introduced, including making it so any small business outgrowing the small business rate relief currently offered by the government will not pay more than £50 extra tax per month next year.

Hammond also announced a new tax on Britain’s self-employed, which aims to raise an extra £145 million for the Treasury by 2021-2022. He also appeared to break a key pledge from the Conservative party’s 2015 general election manifesto by doing so. Self-employed people will in fact be hit by a new national insurance hike.

He said the current situation, which sees self-employed workers pay lower national insurance rates, “undermines the fairness of our tax system”.

“The employed and the self-employed use public services in the same way but the lower National Insurance contributions from the self-employed will cost the public £5bn this year alone,”

There was a further rise in the UK’s tax free personal earnings rate, a seventh consecutive year of increases:

Hammond did not engage in one of the budget’s great traditions and said that there will be “no changes to previously planned upratings of duties on alcohol and tobacco.”

Turning to schools, the chancellor announced fundings for 110 new free schools, aimed to help academically gifted students from poorer families to gain a top class education. The government had already announced 500 new free schools to be built.

An additional £2 billion of grant funding over the coming three years was also announced by Hammond, with £1 billion in the first year. The government will also release a green paper later in the year to set out a strategy for long-term funding of social care.

Early in his speech, Hammond hit back at the fiscal policies proposed by the opposition Labour party, saying that the Conservative government will persist with its economic plan. “By the way, they don’t call it the last Labour government for nothing,” he joked.

Hammond, Britain’s most senior fiscal policymaker, is focusing on portraying Prime Minister Theresa May’s government as a steady hand at the wheel as Britain steers through the rough seas of Brexit. With growth expected to slow markedly in the face of economic uncertainties around leaving the EU, Hammond needs to reassure the public that he is prepared for a rough few years for the UK economy.

Earlier on Wednesday, the chancellor told cabinet colleagues that today’s budget “lays the foundations of a Britain that works for everyone. It maintains stability, increases our economic resilience and prepares Britain for a highly skilled global future outside of the European Union,” a Downing Street source told Business Insider.

“He set out the main themes which he said were helping people get the skills they need to do high-paid, high-skilled jobs in the future, give more children the chance to go to a good or outstanding school and continues to bring down the deficit so we can get back to living within our means,” the source added.

UK GDP has now grown in 16 consecutive quarters. The last time UK GDP shrunk over a quarter was in Q4 of 2012, when the economy readjusted to normality following a huge boost from the 2012 Olympic Games in London.

However, many Brits are still struggling to make ends meet, and the government has been roundly criticised by the Labour party in the run-up to the budget.

“The Tories say they are on the side of working families, but they are going ahead with cuts to in-work benefits, and presiding over an economy where six million people earn less than the living wage, and four million children are in poverty,” Shadow Chancellor John McDonnell said in a statement on Tuesday evening.

Hammond had been expected to deliver a straight, unentertaining budget, but made several jokes, including saying that Labour leader Jeremy Corbyn is “so far down a black hole that even Stephen Hawking has disowned him,” referring to comments earlier this week from the famed physicist. He also joked that driverless technology in cars was “something the party opposite knows something about.”

This post will be updated continuously as Hammond delivers the budget.