Budget

Spring Statement 2018

Date: 13 March 2018
Contacts: Carl Emmerson , Thomas Pope and Paul Johnson

Chancellor Philip Hammond delivered the first Spring Statement on Tuesday 13 March 2018, responding to the OBR's latest economic and fiscal forecasts. Below is some initial commentary from IFS researchers.

A full analysis was presented at a briefing on Wednesday 14 March 2018. 

Presentations

 

Initial IFS response to Spring Statement 2018

1. Growth outlook much weaker than 2 years ago

“The growth forecast for 2018 has been revised up a little since November. But slightly weaker growth thereafter leaves the outlook for the economy in five years time broadly unchanged. Overall the forecasts are for subdued medium-term growth, with an economy that is more than 3% smaller in 2020–21 than was being forecast just two years ago.”

Thomas Pope, Research Economist  


"Against a long term trend of at least 2% a year growth, after poor growth since 2008, and compared with growth across rest of OECD, these are not encouraging forecasts"

Paul Johnson, IFS Director


 

2. Forecast deficit much higher than 2 years ago

 

“The Chancellor revised down the forecast deficit for this fiscal year by almost £5 billion. This is good news and the deficit has been returned to pre-crisis levels. However the forecast for 2019–20 is for a £34 billion deficit, rather than the £10 billion surplus forecast just two years ago. The government now intends to eliminate the deficit by the mid-2020s, but even delivering that would entail difficult choices and missing it would certainly not be a surprise.”

Carl Emmerson, Deputy Director


 

3. Wage growth

"Despite a very marginal upgrade to the forecast for earnings growth today, real average earnings are now expected to grow by just 3.5% over the next 5 years, meaning their level in 2022-23 would be similar to 2007-08. Meanwhile inflation will continue to erode the value of most working-age benefits as they are frozen in cash terms, alongside other benefit cuts. Together this means we expect a further period of weak growth in the living standards of working age households."

Robert Joyce, Associate Director