As the CPS warned, productivity forecasts were slashed at the Budget, leading to 3 percentage points of growth being wiped out over the next 5 years
The Chancellor’s measures on universal credit and NHS spend were necessary, and moves on business rates will help firms of all sizes.
The Budget was not serious on dealing with productivity problems, the measures on housing were deeply disappointing
The Budget was dominated by the OBR’s slashing of productivity forecasts, which wiped 3 percentage points off predicted economic growth over the next five years.
As a result, Britain will borrow more and is further away from achieving a budget surplus.
Given these constraints, the Chancellor could have done a lot worse. In particular, the changes to Universal Credit were necessary, and the help on business rates and freezing of the VAT threshold will help firms of all sizes.
Measures on housing were deeply disappointing, however. No concrete steps on planning were announced, and abolishing stamp duty for first-time buyers could actually make things worse.
Hammond should be commended for not going on a spending splurge – but this Budget will do little to solve the UK’s productivity woes.
Daniel joined the Centre for Policy Studies as Head of Economic Research in November 2015. He was promoted to Deputy Director in March 2017. Prior to joining the CPS, he worked in research roles for a number of parliamentarians. Daniel left the CPS in March 2018.