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Why was the budget so boring?

October 2018

The 2018 Budget was boring, even by the standard of recent budgets, but the constraints of Brexit make it difficult to implement any radical ideas

  • It was tough to pick out any highlights from this year’s budget, with little change
  • As Brexit negotiations escalate, there is a danger that any significant shake-up would have to be redone 
  • The good news for advisers is that everything remains the same

There is a certain predictability to the annual budget: first there is the inevitable hoo-hah – will this be the year the Chancellor finally cuts income tax relief? Or raises income tax? The incumbent Chancellor then stands up on the day, gives an hour or so of political spin, and the end we find out he has done really very little at all.

Of course, there are exceptions: George Osborne’s changes to the pensions regime made for an ‘exciting’ budget (all things are relative). No doubt if Jeremy Corbyn’s Labour Party got into power, we would not be snoozing through that budget. But boring budgets, particularly under the incumbent Chancellor and post-Brexit, have become the norm.  

Certainly, it was tough to pick out any highlights from this year’s budget. It was the beginning of the end of austerity, but not quite. There were some assorted tax cuts, but not many and nothing of any great significance. It was, said the Institute for Fiscal Studies, ‘bit of a gamble’ – note, only a bit of one. It was, in the end, the tiniest redistribution, with very little to interest the headline writers. 

Part of this is Brexit. It is difficult to implement any radical policies while the civil service is tied up in negotiations and any budget may have to be rewritten in the event of no deal being agreed. There is a danger that any significant shake-up would be a waste of effort and need to be undone further down the line. It may also be that the Conservative party feel they have achieved about the right balance – taxes are low, but not too low; spending is under control. Tax receipts are rising. It is all about right. 

That said, the good news for advisers is that everything remains the same. They have won another short-term reprieve in terms of pensions tax relief, IHT allowances and low capital gains tax rates. This means that they have longer to whip their clients’ finances into shape before they are potentially ravaged by a tax-and-spend government or by a new wave of austerity necessitated by Brexit.

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