In the first budget statement since Britain left the EU, Chancellor Phillip Hammond has warned citizens to prepare for a “rainy day” with the expectation of a gloomy economic forecasts.
The Chancellor confirmed that the Government has abandoned the previously held target to spend less than it earned by 2019 as the Office of Budget Responsibility (OBR) predicts borrowing will actually increase to £21.9bn that year. The OBR also predicted that the UK will have to borrow an extra £122bn by 2020-21, a far cry from the savings promised by the Leave campaign.
It’s likely that the statement could have a big impact on the personal finances of many citizens. Those on benefits are likely to be impacted the most as further cuts to Universal Credit are expected alongside the four year freeze in current benefits, despite a rise in the cost of basic amenities and services. Though the Chancellor announced a freeze on fuel duty, motor experts have also warned that drivers may be stung by higher insurance fees when Insurance Premium Tax rises from 10% to 12% in June 2017.
That said, Hammond has pledged to support the construction of new homes, including setting up a new £2.3bn Housing Infrastructure Fund to help build up to 100,000 new homes. And, lower income tax-free earnings have been reaffirmed at £12,500 and the higher income tax bracket has been confirmed at £50,000.