Daniel Mahoney, Head of Economic Research at the CPS, said:
“The headline story from this Budget was the dramatic downgrading of Britain’s productivity forecasts – a minute-long section of Philip Hammond’s speech that will add as much to the deficit as the rest of it put together. In 2019, for example, productivity growth will be 0.7 percentage points lower than was predicted earlier this year. Overall, these revisions to productivity will knock nearly 3 percentage points off nominal GDP growth over the next five years.
“Given that this was the story of the Budget, it was a shame that the Chancellor did not outline more measures to improve productivity – such as those suggested by the Centre for Policy Studies recently.
“The policy decisions made at this Budget will put further strain on the public finances, adding around another £22bn of debt over this parliament. But in macroeconomic terms this is relatively small – so the Chancellor should be commended for resisting the temptation to engage in a spending splurge.”
Robert Colvile, Director of the Centre for Policy Studies said:
“Within the constraints imposed by the productivity and GDP downgrade, the Chancellor did many things right - although there were arguably too many minor, interventionist initiatives. But the U-turn on Universal Credit was necessary and welcome, there was a cash boost for the NHS, and firms will benefit from the more generous offer on business rates. He also avoided some expected bear traps, such as punishing white van men by lowering the VAT threshold.
“While the Chancellor has remained relatively prudent, it is disappointing that most of his promises will be funded by increasing the deficit. But the real disappointment came on housing. Yes, a review of urban planning was promised. But abolishing stamp duty for first-time buyers will do little to help – and may even increase prices – without much more sweeping reform of our broken planning system, including the green belt.”