Sipping tea from a cup emblazoned with his own name and title, Chancellor Philip Hammond cut a relaxed figure last night as he put the final touches to the Budget ready for delivery later this afternoon.
Hammond is feeling calmer than you might expect from someone tasked with steering the economy through a backdrop of momentous uncertainty created by the impasse in Brexit negotiations. This is in part thanks to higher-than-expected tax receipts delivering a £13bn windfall to public finances, enough to put the spring back in the chancellor’s step as he makes his way to the House of Commons for his third Budget.
This significant boost in public finances will grant Hammond licence to loosen the purse strings more than he otherwise might have done and get to work making Theresa May’s pledge to end austerity a reality.
It is understood that there will be more money for mental health services in England as part of a wider £26bn boost for the NHS over the next five years. A freeze on fuel duty is also expected, as well as £900m in business rates relief for small businesses and a £650m cash injection aimed at rejuvenating the country’s high streets that would see more shops converted into homes and leisure facilities.
However, you don’t get the nickname ‘Spreadsheet Phil’ by being a man who gets a thrill from splashing the cash so there will be no bonanza when it comes to spending commitments. Sure, the chancellor’s central message will be that his style of financial prudence has formed the foundation for a brighter outlook for the economy but that will do little to keep the critics at bay who are pressuring him into promising more money for other key public services.
To that end, Hammond will attempt to manage expectations by saying that the end of a decade of austerity was “in sight”, however, it is all very much dependent on the quality of Brexit deal that the PM returns from Brussels with. He has also warned that today’s Budget will need to be ripped up should May not get a deal “on reasonable terms”.
So, all in all, expect a Budget that, on the surface, heralds an end to austerity but just enough not to put the government in a tight spot while economic uncertainty continues to reign. If the chancellor manages this, I would hazard a guess he’ll be toasting a job well done with something rather stronger in his mug.
Leicester City FC last night announced that its chairman and owner was killed when his helicopter crashed outside the stadium on Saturday night. Vichai Srivaddhanaprabha was one of five people alongside two members of his staff, the pilot and a passenger to lose their life after the aircraft spiralled out of control shortly after taking off from the pitch inside the stadium.
Far-right candidate Jair Bolsonaro has swept to power in Brazil after winning the country’s presidential elections. Bolsonaro, who campaigned on a promise to eradicate corruption and to reduce the country’s high crime levels, won 55.2% of the votes cast against 44.8% for Fernando Haddad from the left-wing Workers' Party.
A passenger plane carrying 188 people has crashed into the sea shortly after taking off from the Indonesian capital of Jakarta. No survivors have yet been found and it is unclear what caused the Lion Air aircraft to crash into water.
Lewis Hamilton has become the second most successful F1 driver of all time after winning a fifth World Championship. He finished fourth in yesterday’s Mexico Grand Prix, enough to become only the third driver to win five world titles.
Business & Economy
Tesla owner Elon Musk has been given a vote of confidence after its second biggest shareholder said it would be willing to invest more money into the electric car maker. Baillie Gifford, the Scottish fund manager that owns nearly 8 per cent of the company, is prepared to give more capital to the entrepreneur who they say is a man of “vision and ambition, who’s working towards a social good”. (£)
Stationary chain Paperchase has posted a pre-tax loss of £6.3 million and seen underlying earnings halve as fewer people visited its UK stores. The company, which wa founded in 1968, said the fall in profits was a result of restructuring costs, with CEO Duncan Gibson revealing that the plan was to transform the company from a “primarily UK-centric store business to a multi-channel, multinational business”. (£)
The week ahead
As well as the Budget, today sees the start of the two-day EU-Arab World Summit as policymakers from the Middle East and north Africa come together to discuss the biggest issues facing the regions. Migration, culture and energy use are expected to be high on the agenda of the summit.
Some big corporate names announce results on Tuesday with Coca-Cola, Ebay, General Electric, Facebook and Pfizer all scheduled to report. Also, Uber go to court as it looks to defend its business model of treating drivers as self-employed.
Finally, on Thursday, the Bank of England’s Monetary Policy Committee meet, with the smart money on the committee voting to keep interest rates the same. The BoE also releases its latest inflation report, which should give us an indication on how it interprets the latest ups and downs in the financial markets. In recent months the economy in the UK has developed in line with the BoE’s previous forecasts.
Lok'n Store Group
UK Economic Announcements
(08:30) Consumer Credit
(08:30) M4 Money Supply
(09:30) Mortgage Approvals
International Economic Announcements
(12:30) Personal Consumption Expenditures (US)
(12:30) Personal Income (US)
(12:30) Personal Spending (US)
Columns of Note
Using his weekly column in The Sunday Times, Kevin Pringle says that Conservative MSP Michelle Ballantyne’s comments that “people on benefit cannot have as many children as they like” misses the point as we all on “benefit” to some degree. Pringle concludes by saying that, instead, we all benefit from the good society, whereby people pay more or less over the course of a lifetime as circumstances change. (£)
In the FT, Gavyn Davies asks if the US markets have fallen out of love with Donald Trump. He says Trump took full credit for a perfect economy and the markets responded enthusiastically. However, October appears to be a watershed in terms of a change in mood by the markets towards the president. (£)
Did you know?
Washington, D.C. uses a series of acoustic sensors called “ShotSpotter” to detect gunfire. When “ShotSpotter” sensors detect a loud noise, a central computer program analyses the acoustic signature, pinpoints the suspected location to within a few yards and notifies police.
House of Commons
Home Office (including Topical Questions)
Budget Statement - Mr Philip Hammond
Flight paths at Edinburgh airport - Christine Jardine
House of Lords
Government plans to 1) withdraw their notice under clauses 2 to 5 of Article 50 of the Treaty on European Union, and (2) offer through the Council of Ministers continuing free trade, residence and security to EU citizens before agreeing any financial settlement in the Brexit negotiations - Lord Pearson of Rannoch
Modernising rail fares - Baroness Randerson
Sufficient personnel and equipment being ready and trained to take full control of the UK's borders by the end of March 2019 - Lord Wallace of Saltaire
Investment in the railway network in the North of England - Lord Greaves
No business scheduled
House of Commons
Foreign and Commonwealth Office (including Topical Questions)
Ten Minute Rule Motion
Tobacco - Sir Kevin Barron
Continuation of the Budget Debate
House of Lords
Support for the children of prisoners - The Lord Bishop of Gloucester
New trains service on the East Coast Main line between Newcastle and Edinburgh - Lord Beith
Importance of identification of spectrum conditions, such as dyslexia, ADHD and dyspraxia, on educational and other life outcomes - Lord Addington
Introduction of legislation to reduce the maximum bet for fixed-odds betting machines to £2 - Lord Griffiths of Burry Port
Scottish Government Debate: A Digital Society For All: Working Together to Maximise the Benefits of Digital Inclusion