Spring could prove to be an economic washout
A modest burst of warm weather towards the end of last week may have coaxed the snowdrops and bluebells into life but don’t go dusting off the BBQ, as the cold isn’t done with us yet. Meteorologically speaking, Spring kicks in on 1 March but forecasters say the first month of the new season is likely to be characterised by wet and windy weather – and chilly nights.
For many of us, putting the clocks forward (this year on 30 March) marks a small but significant step towards summer but before the evenings get lighter there’s the small matter of the Chancellor’s Spring statement to get through, locked in for 26 March.
Rachel Reeves will be hoping to avoid the necessity of announcing any tax or spending changes in the statement, but if the OBR’s growth forecasts come in at the lower end of expectations, she may be forced to mark the end of winter by extending a freeze on income tax bands or messing with Isa limits. Either way, she’s unlikely to put a spring in the nation’s step.
This takes us to April, and though the days will be longer it’s set to be a painful month for a number of reasons. Water bills will rise, along with household energy bills (the regulator has just hiked the price cap so expect another £100 to go out the door, or window – depending on your energy efficiency). Council tax will almost certainly rise, with most authorities opting for an increase of 4.99 per cent. A rise of more than 5 per cent requires the backing of voters, unless you’re unlucky enough to live in one of the many areas where local finances are so bad the government is allowing councils to ignore that rule.
April also brings with it a whopping change to stamp duty, dropping the £250,000 threshold where the tax currently kicks in to just £125,000. Fiscal drag from the income tax threshold freeze will also put the squeeze on earnings. As for employers, while the hospitality sector might be looking forward to opening up the beer gardens and terraces, April’s tax hikes and wage cost increases are causing plenty of sleepless nights.
All in all, Spring doesn’t look likely to be a garden of growth for the government.