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Budget holiday for savers and investors

  • No news is good news for pensions
  • Stamp duty change at odds with Lifetime ISA rules
  • Estate agents boosted
  • Cautious economic outlook

Tom McPhail, Head of policy:

"No news is good news for pension investors; the stability of no change is a welcome relief after years of political interference and the salami-slicing of reliefs and allowances. There may have to be further changes at some point in the future; higher rate relief in particular is still likely to be scrapped as soon as a government feels it is strong enough to do it; in the meantime investors can make hay while the sun shines."

Danny Cox, Chartered Financial Planner:

"Stamp duty changes boosted first time buyer transactions by just 1% last time it was cut and property prices increased during that time by 0.7%.

The change is also at odds with the new Lifetime ISA rules. Either or both in a couple can be a first time buyer and use a Lifetime ISA bonus to purchase, whereas both need to be first time buyers to benefit from the stamp duty cut.

We’ve seen considerable change in ISAs, inheritance tax and capital gains tax in recent years and this has been a welcome Budget holiday for savers and investors"

George Salmon, Equity Analyst:

"There’s not much movement within the big builders, despite the chancellor clearly aiming to give particular support to their small and medium sized rivals and investigating whether land is being intentionally held back from development. However, the stamp duty relief for first time buyers has boosted the estate agents. Foxtons and Countrywide have both jumped sharply, as the market bets that giving first time buyers a helping hand will help transaction numbers pick up from the depressed levels we’ve seen so far this year."

"A freeze on Air Passenger Duty is good news for passengers, but whether it will feed through to airline profits is less clear. The sector is locked in a price war at the moment and there’s already too much capacity chasing too few flyers. Reducing the fixed cost base only increases scope for price cuts and that doesn’t drive weaker players out of the market."

Ben Brettell, Senior Economist:

"Against a backdrop of cuts to the OBR growth forecasts, Philip Hammond was unsurprisingly keen to talk up the economy today. Forecasts were revised downwards across the board, with GDP growth expected to be as low as 1.3% in 2019 and 2020. Deficit reduction remains on track, however, and this has given the chancellor some headroom for targeted spending, including extra cash for the NHS.

The UK’s cost-of-living squeeze remains a key talking point. It looks likely it’ll come to an end at some point next year, with inflation forecast to peak at 3% this quarter and fall back towards the 2% target over the past twelve months.

The other part of the equation – wage growth – remains elusive, however. Productivity growth is the only way to sustainably increase real wages, and despite continued forecast improvements, the UK’s productivity has been flatlining since the financial crisis. As expected the chancellor unveiled a raft of measures aimed at solving this productivity puzzle, with R&D spending, tech initiatives and infrastructure all key areas of focus.

But given that economists can’t even agree on the cause of the UK’s lacklustre productivity, whether these initiatives will have any impact is open to debate.

Following the backlash and subsequent U-turn over the proposed increase in NI for the self-employed in his last Budget, I’m not surprised Hammond chose to leave the VAT threshold alone. Small business owners will be breathing a sigh of relief."