What's going on?
By Jove…the UK’s finance minister said on Wednesday that the British economy would grow more slowly than predicted for the next four years – and, surprise surprise, the culprit appears to be Brexit.
What does this mean?
Wednesday saw the presentation of the UK government’s annual public budget for 2018, and it included some pretty significant news. Due to persistently low productivity coupled with the general business uncertainty surrounding the Brexit vote, annual economic growth predictions have dropped below 2% for the next four years.
On top of that, the government has set aside £3 billion to stimulate the economy in the event of any major economic turbulence related to Brexit. As things stand, Britain will end up spending even more beyond what it takes in from taxes (a.k.a. it will accrue a deficit) – contradicting earlier political promises that the country’s government would start turning a budgetary surplus by 2020.
Why should I care?
For you personally: The government also announced that it was abolishing the “stamp duty” tax for most first-time homebuyers.
House affordability has been a hot topic in the UK of late, especially as younger home ownership has been on the decline for a while and house prices in regions like London have skyrocketed in recent years. One way the government is helping younger buyers to afford a home is by abolishing stamp duty – a type of tax that’s applied to housing transactions – for first-time buyers of property worth less than £300,000.
For the dinner party discourse: The so-called “Brexit Bill” wasn’t in the budget…
A major sticking point in the ongoing Brexit negotiations between the EU and the UK is how much Britain will pay to cover its previously agreed financial commitments to EU-funded programs in areas like research & development: an amount the EU puts at around £60 billion! However, those numbers won’t show up in Britain’s public budgets until the EU and the UK finally agree (maybe soon) on how much Britain owes.