Chancellor Has a Spring in His Step, As He Reveals Economic Forecast in 2019 Spring Statement

Chancellor Philip Hammond delivered the Spring Statement this afternoon. The Spring Statement is an opportunity for the Chancellor to update on the overall health of the economy and the Office for Budget Responsibility’s (OBR) forecasts for the growth and the public finances. As predicted the Statement was a fiscal non-event with few announcements on tax and spending. The Chancellor did however express optimism over the future of the UK’s economy, optimism which he put it, “can only be realised if the UK takes the cloud of uncertainty which is a no deal Brexit, off the table”.

Below are four highlights from the budget:

1. The UK has a solid economic future to look ahead to, IF it can avoid a no deal Brexit

The Chancellor waxed lyrical about the UK’s economic prosperity, highlighting predictions from the Office for Budget Responsibility (OBR) that the UK is set economy to grow by 1.2% this year. Real wages are also increasing at their fastest pace in over a decade and a further 600000 jobs are set to be created by 2023. Although job creation is a cause to celebrate, REC data shows that candidate availability is declining month on month and a no deal Brexit would have disastrous effects on the labour market.  The UK needs a clear transition period and a sensible approach to EU immigration, if it is to achieve the levels of economic prosperity the Chancellor believes is in reach.

2. New review on employment and productivity effects of minimum wage rates

The Chancellor announced the launch of a review of the international evidence on the impacts of minimum wages. In particular the review will be looking into the implications for future minimum wage policy in the UK, bearing in mind the aspirations the government set out in Budget 2018, to end low pay in the UK.  The REC looks forward to working with HM Treasury and the Department for Business, Energy and Industrial Strategy to feed into this review.

3. Company audit committees will be required to report late payment practice

The REC welcomes the government’s plans to help SMEs address late payments. 24% of UK businesses report that late payments are a threat to their survival, the highest reported level among all European countries. Even if it is not a threat to the survival of a business, late payments have a significant impact for companies, creating administrative costs and cash flow issues as well as leading to loss of income, inability to hire and pay bills. Cash-flow is a major challenge for recruitment businesses which is why REC members will welcome progress on addressing late payment.

4. There will be a £700 million worth of funding to help small businesses take on more apprentices

The Chancellor also promised that previously announced apprenticeship reforms in the Autumn Budget would be introduced a year early. The REC believes that these reforms do not go far enough in delivering the flexibility that is needed with the apprenticeship levy. The REC has long campaigned for the levy to be broaden into a  skills levy that provide training opportunities to temporary workers, as well as helping recruitment businesses who are currently paying the levy but are unable to spend it. 64% of REC members say they would fund agency workers’ training if the Apprenticeship Levy was broadened to a skills and training levy.