Spring Statement – Job Market Impact?
It may not have been the longest speech that Philip Hammond delivered last week but it was a message of continued economic development with further future growth predicted. The economy has grown for five consecutive years, and exceeded expectations in 2017, leading to the OBR (Office for Budget Responsibility) increasing their forecast for growth in 2018. Employment has increased by 3 million since 2010, which is the equivalent of 1,000 people finding work every day. Borrowing has fallen by three-quarters since 2010. In 2009/10 the UK borrowed £1 in every £4 that was spent. The OBR expect that we will borrow £1 in every £18 this year and debt will start falling as a share of GDP next year.
It is still important to remember that the UK’s debt remains too high, equal to around £65,000 per household which makes the economy vulnerable to future shocks and future generations will feel the burden of this unfortunately. The cost of debt interest payments is around £50 billion each year – more than the amount spent on the police and armed forces combined which is quite a sobering statistic.
With a falling level of inflation and an increase in wages, how does this impact on the employment market?
As our March mailer shows, next month has an increase in the National Living Wage. This will impact on those businesses that employee staff on such salaries. However, it is clearly good news for such staff that are currently on £7.50 per hour. The unemployment rate is close to a 40-year low and the OBR predict there will be over 500,000 more people in work by 2022 which is good news. There was further positivity for the manufacturing sector as it has apparently achieved the largest unbroken run of economic growth since the late 1960’s. Hopefully this can continue amidst the national skills shortage in the UK.
Finally, the government has also invited small business to give their views on the impact of the current VAT threshold of £85,000 as some have expressed concerns that it has an impact on business growth. For those interested in participating, the link for the survey is https://www.surveymonkey.co.uk/r/W7TLCZ7 and is open until 5th June 2018.
Further reading can be found at https://www.gov.uk/government/news/spring-statement-2018-what-you-need-to-know