Chris White sums up the last Budget before Brexit.

By the time the Chancellor sat down after nearly 70 minutes, watchers were furiously scribbling down the numerous spending pledges made in the course of the speech.  In a way, it was a speech we have become unaccustomed to in the last decade, with Conservative Chancellors over the years repeating the same mantra that action was needed to restore sound finances.

The Prime Minister had raised expectations in her Conference speech that austerity would end, and the test for the Chancellor was whether he could meet them. We now know that the Office of Budget Responsibility (OBR) had provided updated figures to Downing Street showing a fiscal windfall in the days before Conservative Conference.

Reviewing the borrowing numbers for the next few years shows that they are very similar to those in the Spring Statement.  Therefore the additional tax revenues have spent rather than helping to further reduce the deficit, which remains hovering around 1% of GDP.  This windfall, described by the OBR as the “largest fiscal loosening at any event since [its] creation” has allowed the Chancellor to meet the Prime Minister’s challenge and say that “the era of austerity is finally coming to an end”.

The Chancellor was therefore able to pull a few small and medium sized rabbits out of the hat in a campaigning Budget that would have pleased many Conservative MPs.  The largest rabbit was to increase the personal tax threshold to £12,500 and the higher rate threshold to £50,000 a year early, but also saw £420m for fixing potholes and freezing fuel duty, as well as beer and whisky duty.

He was also able to neutralise a number of attacks from the Opposition.  For a long time Labour have criticised the Government’s lack of action on ensuring the digital tech giants pay their fair share of tax, and the Chancellor promised that a new ‘Digital Sales Tax’ would help to “update the rules of the game”, although the Institute for Fiscal Studies has pointed out that this is estimated to raise £400m against corporation tax revenues of £50bn. The Government also pledged to abolish any new PFI initiatives, and put cash back into work allowances, alongside an extra £1bn over 5 years to help with the transition to Universal Credit.

In what will probably be his last Budget, Philip Hammond delivered a Budget for the here and now that will be welcomed by MPs, the press and the JAMs (the ‘Just About Managing’s). 

Yet there was barely a mention of the huge structural challenges facing the UK, in particular any major policies to address the Housing Crisis.  Brexit itself was barely mentioned, other than a brief statement that should the UK face a no-deal Brexit, the Chancellor will upgrade the Spring Statement next year to a full fiscal event.  Indeed, the OBR’s assessment of the Budget was entirely predicated on a deal being achieved.  

So much depends on what happens outside of the Commons in the negotiations with the EU over the next two months that this Budget felt very surreal.  We shall soon know if the Chancellor will have to come back to the House with an emergency Budget.  If he does so, let’s hope he gets a new joke writer…