Budget 2014.

19th March 2014

At 12.33pm today the Chancellor of the Exchequer, George Osborne, stood up in Parliament and delivered his fifth annual Budget statement.

There has always been much hype surrounding the annual Budget Statement, but in reality it is very rare to have any major shocks. Previously this has been the result of a Chancellor’s very clear economic views, so it has always been the actual detail of the tax and spending decisions that was of interest rather than the direction of travel. This has also been the case with George Osborne’s previous four Budgets: his statements have always been about austerity.

Unsurprisingly, given the state of the UK’s public finances, today’s budget was no different and as with his previous Budgets, he had very little room for ‘giveaways’.

Much of the ‘big’ announcements had already been made, such as: an extension to the ‘Help-to-Buy’ scheme (which allows people to purchase a new home with a 5% deposit) until 2020; a new garden city in Ebbsfleet, Kent, for 15,000 new homes; and the increase in the tax-free allowance for child care. It was also widely expected that George Osborne would increase in the personal tax allowance to £10,500 and freeze carbon taxes (to relieve the pressure on energy bills).

However, George Osborne did provide one major shock: the annual ISA allowance was increased to £15,000.

Unsurprisingly with just 14 months until the next general election, this Budget was more overtly political than his previous Budgets: George Osborne put his economic stewardship at the heart of the next election campaign by reminding the public that the Labour party have admitted to making ‘errors’ when in power, asserting that his austerity had put Britain on the path to recovery and laying out plans for further cuts after the next election which puts pressure on Labour to match his plans if they are to show they are serious about controlling public finances.

With the exception of shares in the bookmakers (such as William Hill and Ladbrokes) which fell heavily on duty changes, from a stock market standpoint the annual Budget statement had very little impact as investors are more interested in geopolitical tensions over Ukraine (which may impact commodity prices and therefore global growth) and tonight’s announcement from the US Federal Reserve which may see a further reduction in the monthly bond buying program (Janet Yellen, the new Fed Chair, said last month the US economy was strong enough to withstand measured reductions to the central bank’s monthly bond purchases).