Chancellor Hammond sprung few surprises in his Budget today. The abolishment of stamp duty for homes valued up to £300,000 for first-time buyers was a rare exception (stamp duty is a major Treasury tax earner) while there was more (expected) commitment to building new homes – up to 300,000 by mid 2020s. An abundance of new hard cash does not look on the cards.
The move may help reignite the property market momentarily says CEO of eMoov Russell Quirk, "but some may say acts as yet another diversion from the elephant in the room of a continued failure to build a meaningful number of affordable homes." He added: "Indeed a cynical electoral bribe."
At a little after 3.30pm the shares of a spread of UK house builders were showing clear signs of being underwhelmed: Persimmon down -1.75%, Berkeley Group down -2.7%, Barratt down almost -3%. Some of the negativity is worry about Hammond’s “urgent” promise to look hard at where land is not being built on, plus new powers to raise council tax on empty homes.
The Budget did little for most FTSE 100 stocks and the revised OBR forecasts – growth predicted to be 1.5% compared to 2% estimated in March by the Chancellor – was more economic bleakness made worse by GDP predictions of just 1.3% for 2019/2020.
In recent living memory the UK’s productivity issues have never been laid more clearly bare. Meanwhile more borrowing and spending announced by Hammond means more time needed for the UK's public finances to land in the black.
News of a rise in the National Living Wage did not impress the British Chambers of Commerce Jane Gratton. “Our research shows that sharp increases in the National Living Wage will cause many firms to implement cost reduction measures, such as reducing recruitment and staff hours or increasing prices.”
At close to 4pm sterling was trading however +0.36% higher at 1.3279 while the euro was +0.42% up against the dollar at 1.1786. The FTSE 100 was up just seven points tonight at 7,419 with Kingfisher and Fresnillo shares up +4.5% and +4.3%.