The Autumn Budget: CME’s Three Minute Summary
With Brexit negotiations in full swing and interest rates on the rise for the first time in several years, this week’s Budget – the first fully-blown Budget replacing the old style Autumn Statement – has been hotly anticipated.
All the pre-budget talk was about stamp duty and, indeed, stamp-duty free purchases for first time buyers is the consumer headline. But now that Mr Hammond has given his speech and Mr Corbyn has delivered his response, we thought we’d give you our summary of the promises and pledges that are likely to affect the construction sector.
With Brexit uncertainty still influencing the economic landscape, the Chancellor was forced to revise down the growth forecast from 2% to 1.5% for this year. Moreover, the ongoing forecast predicts that growth will continue on a downward trend for several years, remaining well below 2%.
Forecasts on productivity and business investment were also revised down. For anyone that’s been watching construction output figures this year, those announcements will have come as no surprise and reflect what we’ve seen happening in the marketplace over the past few months but they are still an indication of a more challenging commercial environment ahead.
So what does the Government plan to do to counter reduced growth and productivity and which of these measures will support the construction sector?
Top of the list is housebuilding, with £44 billion in capital funding and loans to support the construction of new homes over the next five years and a target of 300,000 additional homes per year by the mid 2020s. On the face of it, this is good news for the construction supply chain, though, as BBC correspondent, Laura Kuenessberg pointed out on Twitter, ‘underwriting borrowing and giving housebuilders guarantees [is] not the same as spending cash on putting spades in the ground.’ In reality, we must assume that social housing will only be delivered as part of investment in private housing.
More immediately of interest to many will be the £400 million pledged to regenerate housing estates and the £1.1 billion that will be invested in unlocking strategic sites for development, because these measures are likely to have a more immediate impact on starts on site. Similarly, the use-it-or-lose-it announcement on new measures to enable compulsory purchase of sites landbanked for financial reasons could help to kick start new projects.
For construction businesses involved in delivering health sector projects there was good news too, with £10 billion pledged for capital investment in hospitals on top of £2.8 billion earmarked for NHS England.
Meanwhile in the civils sector, a £1.7 billion transport fund for the city regions may help the Northern Powerhouse concept to finally get moving.
In general, it was a Budget of few surprises and but there were some crumbs of good news for the construction sector. Time will tell how deliverable some of the financial packages really are but in housebuilding and health estates at least, there looks like being busy times ahead.