Spring Statement: comment

Philip Smeaton, chief investment officer, Sanlam UK: “Today’s Spring Statement was little more than a blip on the political radar. Squeezed in-between Prime Minister’s Question Time and a motion on leaving the European Union without a deal, it’s clear that Parliament’s mind was somewhere else. Despite the long shadow cast by the Brexit drama, Philip Hammond came to the House of Commons with positive news on tax receipts meaning that the government is on course to have a smaller deficit in this financial year.

“While in theory this should give the chancellor greater wriggle room, he was at pains to point out that the purse strings won’t be loosened until there is greater clarity around the UK’s future relationship with the EU. More than anything, today’s statement had a very clear motive; to dangle the prospect of a ‘deal dividend’ in-front of those MPs who may still change their mind and vote for Theresa May’s withdrawal agreement if it comes back for a third time.”

Ritam Gandhi, Studio Graphene: The Spring Statement has been wedged between two important Brexit votes, and I have no doubt many people would have overlooked the Chancellor’s speech. As anticipated, the Spring Statement was light on substance, with many of the UK’s industries not mentioned.

“Yet, as one of the few new policies that were pulled out of the red briefcase, there was some good news for the tech industry – namely, a commitment to make sure the UK is at the forefront of science and innovation through a substantial investment package. What’s more, the Chancellor has remained committed in ensuring the digital marketplace is not dominated by tech giants, offering a preliminary response to the findings announced today by the Digital Competition Expert Panel.

“Much of what the Chancellor has announced today will be determined by the coming fortnight’s unfolding events; after all, renewed calls for a general election could derail Hammond’s plans. But for now, given Westminster’s fixation on Brexit over the last 12 months, it was at least positive to see a commitment to funding for innovation, free from the tired and cumbersome semantics of the Brexit debate we have been hearing on a daily basis. The digital industry is one of the most important parts of the UK economy and the Government is right to do all it can to support innovation without restricting growth with excessive red tape.”

Nikolas Kairinos, CEO , Fountech.ai: “Dubbed by the Chancellor himself as something of a “fiscal non-event”, today’s speech was predictably short and light on meaningful announcements. That said, there were a couple of positives to take away, and the tech sector will perhaps be most pleased by the contents of the Spring Statement.

“Firstly, the allocation of £200 million to ensure the UK remains at the forefront of innovation and research will instil some confidence in the market and shows the Government has not forgotten about tech companies driving innovation. Secondly, the Chancellor reiterated his commitment to democratising the digital marketplace so that organisations of all sizes are able to compete on a level playing field, with the Digital Competition Expert Panel releasing the findings of its review today.

“Hopefully, we should see the Government build upon these commitments over the coming 12 months, and they will hopefully take note of the findings of the digital competition report. Regardless of what shape or form Brexit might take, there’s no denying the importance of the tech industry as key driver of productivity and growth for the UK economy. Hammond was right to provide a boost to the sector in today’s speech, and they must continue to offer support to ensure the country remains a digital powerhouse on the world stage.”

Alex Neilson, Investment Manager, Investec Click & Invest: “The chancellor’s Spring Statement confirms that, despite Brexit uncertainty, the strength of the underlying economy means there are great opportunities in the UK for equity investors.

“British stocks have, over the last thirty years, been the darling of asset managers around the world. Investors in the UK benefit from a business-friendly environment, minimal regulation, good corporate governance and dividends paid in pounds. They also get automatic diversification thanks to the broad range of globally facing companies in the FTSE 100.

Despite these almost-unrivalled fundamentals, UK equities continue to struggle under the spectre of Brexit. Uncertainty surrounding the UK’s departure from the EU has driven UK equities to levels not seen for 6 years, even as the UK economy has improved, with real wages beginning to grow and record high employment.

“Such favourable underlying conditions, combined with prevailing negative sentiment, means UK stocks offer some of the best value equity investments in the world, especially for long term investors. If the government can wrangle a soft Brexit (as Hammond rightly says is likely) the pound should appreciate, thereby reducing operating costs for domestically facing UK stocks. As well as the “Deal Dividend” for public services mentioned by Hammond, smaller and mid-cap companies – companies more reliant on UK consumers – will likely surge in value. We can also expect a boost to consumer confidence.

“When it comes to UK equities, there are of course two sides to the Brexit story. FTSE 100 companies with large overseas operations have benefited from the falling value of sterling. Any boost to the pound provided by the hammering out of a Brexit deal may have an adverse impact on the UK’s largest companies. Still, in the long run these businesses will also benefit from an end to uncertainty.

“Business is all about meeting challenges. Long term investors would do well to remember that British companies, with their solid fundamentals and good corporate governance, are exceptionally well placed to weather the Brexit storm. For this reason UK equities are an excellent opportunity despite, or even because of, Brexit.”

John Phillips, group operations director at Just Mortgages and Spicerhaart: “The chancellor has just announced in the Spring Statement a £3bn affordable home scheme, but perhaps he should be looking more at incentives – like stamp duty relief –  to move the rest of the housing market.

“When the stamp duty relief was first announced for first time buyers, I welcomed it, as stamp duty is one of the biggest barriers for first time buyers entering the housing market. And I think that the chancellor needs to look at the positive impact this has had on first time buyers and do something similar for last time buyers.

“Many older people who want to downsize – either to release cash from their properties, or to move to a more suitable home – are put off because stamp duty makes even downsizing a costly exercise, and this is one of the reasons why equity release is becoming so popular. We know the housing market is struggling at the moment, so we need to open up incentives for people already on the housing ladder as well as those looking to take their first step into order to get things moving again and give second and third steppers more confidence in making that next move.”

Phil Spencer, property expert: “Any boon to Britain’s chronic housing shortage is, of course, not to be sniffed at — but the Chancellor’s plans simply do not go far enough.

“Britain needs a long-term, apolitical and impartial plan to build the homes we so desperately need and not short-term soundbites to keep prospective voters happy.

“Sorting out Britain’s housing crisis will not be a quick-fix; and certainly won’t be accomplished over any one Government’s time in power.

“It’s time that housing experts were brought into the process of developing a strategic housebuilding plan — one that can’t be with tinkered with for the purpose of gaining votes every time a General Election is on the horizon.”


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