Brexit looms large over Autumn Budget

Author

David Roberts, Invest NI Economist
Nov 02, 2018

Budget statements are traditionally delivered on a Wednesday. The last Monday Budget was in April 1962.

The Macmillan Government at the time was concerned about the moderate rate of economic growth and growing regional inequality. Less than 10 days after the 1962 Budget, the Commonwealth Immigrants Act removed the automatic right of Commonwealth citizens to move to the UK, following concerns over high levels of immigration.

Fast forward 56 years and the parallels with the backdrop to Monday’s Budget are plain to see.

The Main Points

With Brexit looming large over the Government, this was never going to be a budget for fireworks.

Uncertainty over the EU exit negotiations meant that the Chancellor retained the option to significantly change tack should a No Deal outcome materialise. If this is the case, an emergency budget will likely be required in early 2019.

The Chancellor’s room for manoeuvre was also limited by moderate economic growth forecasts. The UK economy is expected to expand by around 1.5 per cent in each of the next 4 years, below the G7 average and historical trends. Weak levels of business investment, linked somewhat to Brexit uncertainty, are part of the explanation. By raising the Annual Investment Allowance from £200,000 to £1m per annum from April 2019, the Government is seeking to unlock business investment which may have been held back.

A key spending announcement for Northern Ireland was an allocation of £350m to the Belfast City Deal proposal, a major boost to investment in innovation, infrastructure and related priorities.

What did the Budget mean for NI?

The Barnett Consequential of yesterday’s announcements to the NI Executive is estimated to be £320m.

 

A key spending announcement for Northern Ireland was an allocation of £350m to the Belfast City Deal proposal, a major boost to investment in innovation, infrastructure and related priorities.

There will now be an intensive period of business case development for the key projects, a process which we will be involved in.

The green light was also given to the development of a City Deal proposal for Derry/Londonderry and Strabane.

A £2m contribution was also made to help regenerate the area around Bank Buildings in Belfast City Centre following the major fire in August.

Other key measures for business and the NI economy include;

  •  The National Living Wage will rise from £7.83 per hour to £8.21 per hour from April 2019, equating to an extra £690 per annum for all full time workers aged 25 or over.
  •  Increases in the personal allowance threshold for income tax will be brought forward a year. From April 2019, the level at which people start paying income tax will rise from £11,850 to £12,500 whilst the higher rate threshold rises from £46,350 to £50,000.
  •  From April 2020, contractors, who cannot prove they are genuinely self- employed, will face higher tax and National Insurance bills.. This will affect IT providers, engineers and other consultants as the Government seeks to stop ‘disguised employment’.
  •  Entrepreneurs Relief will be retained, allowing business owners to pay a lower rate of tax when they come to sell their business.

 

Proposals to reduce Air Passenger Duty (APD) and VAT on the tourism sector in Northern Ireland did not progress any further. A Working Group will be established to look at APD, whilst tourism VAT will be kept under review. Whether these measures will be implemented in the future remains to be seen.

Brexit

In the end, it was virtually impossible to get away from Brexit in the budget. The Chancellor made provision for an additional £500m of spending on Brexit preparation activity in 2019/20 over and above the £3.7bn already allocated.

If a Withdrawal Agreement is not concluded in the coming months, there will inevitably be a need to increase spending in a number of areas to address the immediate implications.

For the moment, however, the Chancellor did not announce any new measures to help firms address the challenges of Brexit.

Share this Article

Comments

No comments yet.

Have Your Say

 

Latest Features

Brexit looms large over Autumn Budget
David Roberts, Invest NI Economist
Nov 02, 2018
Customer Service Excellence - it's all about trust
Paddy Robb
Oct 03, 2018
If one thing is certain it is that nothing is certain
Alastair Hamilton, Chief Executive
Aug 14, 2018

Sign up for News

 Enter Code