There was good news for the UK economy on the eve of the Spring Budget announcement by the chancellor, Philip Hammond, with the Organisation for Economic Co-operation and Development (OECD) forecasting UK GDP growth of 1.6% in 2017, up from the 1.2% it predicted in November 2016.
In 2016, economic growth in the UK was second only to Germany worldwide and employment remains at a record high. It’s not all good news though, with the announcement that the UK has £1.7tn debt which equates to £62,000 for every household in the country.
Here are five positive takeaways from today’s speech:
- Pay less tax on your earnings: The personal tax allowance (the amount you’re allowed to earn before paying income tax) is set to rise in 2017/18 for the 7th year in a row to £11,500. In the 2010/11 tax year, the figure was just £6,475. The Conservative’s manifesto commitment on the issue will see the allowance rise further to £12,500 by 2020.
- Increased ISA allowance confirmed: The previous chancellor, George Osborne, had announced last year that the ISA allowance would increase from £15,240 to £20,000 from April 2017 and this was confirmed by Mr Hammond today.
- A new bond: Hammond announced that a new National Savings & Investments (NS&I) bond will be available from April and will pay an interest rate of 2.2% on deposits of up to £3,000. This is good news for savers who might have seen their hard-earned money erode in recent times in the face up to the low bank interest rates and rising inflation.
- Tax-free childcare on the way: Plans were announced to make life easier for working parents with tax-free childcare providing up to £2,000 per year in support for each child under 12. The scheme will initially be open to parents of younger children, but will be extended by the end of 2017 to all eligible parents. For those working parents living in England with three and four year olds, there was more good news as they will be able to apply for a further 15 hours of free childcare per week, bringing the total amount up to 30 hours.
- The road ahead: £270 million has been set aside to launch the Industrial Strategy Challenge Fund, boosting the UK’s focus on so-called disruptive technologies such as biotech, robotic systems and driverless cars. This represents positive news for investors as organisations in this country continue to be at the forefront of forward-looking sectors which will influence how we live in the future. Investment will be made in crucial technological infrastructure with £16m set aside for a new 5G mobile technology hub and £200m for superfast broadband to help businesses become more efficient.
And there was a little more food for thought…
- There will be £300m worth of investment in research talent which includes 1,000 PhD places for STEM subjects (science, technology, engineering and maths)
- £5 million of funding will be allocated for “returnships” to public and private sector, to help people back into employment after a career break
- Subscribe to our monthly newsletter and follow us on Twitter to keep up-to-date with what we’re doing ahead of our launch.
The information in this article is for private circulation and is believed to be correct but cannot be guaranteed. Opinions, interpretations and conclusions represent our judgement as of this date and are subject to change. The information contained in this article does not constitute a personal recommendation and the investment or investment services referred to may not be suitable for all investors; therefore we strongly recommend you consult your Professional Adviser before taking any action. Copyright: Investec Click & Invest Limited. Reproduction prohibited without permission.