Pre-Brexit Budget promises steady growth

Chancellor Philip Hammond’s Budget this week is unlikely to be one that we will talk about in years to come.

As is often the case in modern politics, the vast majority of its contents had been heavily leaked in the run-up to Monday’s speech.

But, for investors and those with a focus on long-term financial planning, Budgets lacking big surprises are often the best.

As former US President Ronald Reagan and a number of other notable people are supposed to have said: “Don’t just do something, stand there.”

One of the biggest concerns prior to the Budget announcement was that the Chancellor might look to reduce the amount of cash savers can put in their pension. As things stand, the maximum is £40,000 per annum and there was talk in some quarters of this being reduced to £30,000 or even less.

Thankfully, the annual allowance remained untouched, principally because Mr Hammond had taken advantage of revised borrowing forecasts which helped to fund a £103billion giveaway.

It allowed the Chancellor to continue the theme of Prime Minister Theresa May’s party conference speech that austerity is finally coming to an end after a decade of belt-tightening.

There are a lot of misconceptions around the annual allowance. For many business owners, putting away money is extremely difficult for the majority of their working life, but in later years they try to catch up meaning that the current £40,000 annual allowance gives them the opportunity to ensure their longer term financial planning is on track.

Other announcements that will be welcomed by the majority of tax payers are the increase in the personal allowance to £12,500 and the raising of the higher rate tax threshold to £50,000.

The Chancellor also disclosed that the Office for Budget Responsibility (OBR) had increased its projections for GDP growth from 1.3% to 1.6%. This is by no means dramatic growth, but often a steadier upward curve is preferable in the long-term to more erratic growth.

Overall, my view is that Budget 2018 is a good Budget for the vast majority. The economy is continuing to move in the right direction. We have waited a long time for signs that the austerity of recent years is coming to an end, but, equally, any loosening of the purse strings needs to be sensible and with the longer view in mind.

There were, of course, very few mentions of the elephant in the room – Brexit. The Chancellor said he was “confident” a deal would be done, but also talked about not being “complacent”.

If his confidence turns out to be misplaced, we may be having the next Budget rather sooner than anyone would want.

  • Clients with any questions concerning this week’s Budget, can give me a call on 0151 353 1066 or email:


Alan Mellor discusses the Budget

How will Brexit affect you?

Alan Mellor

Having a long-term financial plan is vital in order to “weather inevitable storms” like Brexit, according to a leading chartered financial planner.
Alan Mellor, Managing Director of Cheshire-based Phillip Bates & Co Financial Services, says the question he gets asked more than any other at the moment is: How will Brexit affect me?
Alan said: “While there is every chance there will be an economic downturn at some stage over the coming months, the key to good financial planning is to ensure that you are not overly exposed.
“And, as with every significant moment in history, the financial position is far from straightforward. There are always winners and losers.
“For example, a fall in the value of the pound increases the opportunities for businesses which export. Similarly, non-UK investments will typically go up in value as the pound is worth less.
“On the flip side, the cost of goods and other items such as foreign holidays goes up.
“What we don’t know yet, which is causing continued uncertainty for private investors and business owners across the UK, is how the current Brexit negotiations will play out.”
Alan added: “The best case scenario is clearly as smooth a transition as possible. The worst case scenario would see Britain crash out of the European Union in an unplanned and disjointed way. Having said that, even a more chaotic departure from the EU may work out for the better in the longer term.
“When the UK took the shock decision to leave the EU, the pound and the markets went into freefall. It looked like seismic change was on the horizon. The reality over the ensuing 12 to 18 months was somewhat different as investors were on the receiving end of some of the best returns since the 1980s.
“I met a client the other day who first became a client a few months prior to the 2008 crash. When the crash hit and values started to tumble, I was a little nervous. Surprisingly, the client was a lot more relaxed and told me everything would be alright because we had put a long term financial plan in place. When we met up again the other day, he reminded me of our conversation of 10 years ago and, as it turned out, he was right!”
Phillip Bates & Co Financial Services is one of only a handful of Chartered Partnerships in the North West – combining the knowledge and expertise of our chartered accountants and chartered financial planners.
Alan added: “For us, it is less about the money and more about ensuring that our clients have a considered, long-term plan in place that is fit for purpose and capable of weathering the inevitable storms that will come along during the lifetime of the plan.
“It is only through long-term planning that clients can have the best possible opportunity to be in control of their destiny rather than finding themselves dictated to by events outside of their control.
“The political and economic consequences of landmark events like Brexit focus the mind on the importance of having a broad and diversified portfolio of investments.”