On 1 January 2021, Import VAT in the UK underwent two significant changes: Purchases from the EU now attract Import VAT (and Duty) and are no…
Brexit negotiations have had a quiet few days in the run-up to the Budget, with Westminster focused on what the Chancellor would say about the plans for leaving the European Union. And the answer was… well, not much really. At the weekend, Philip Hammond was at pains to point out that in the event of a no-deal Brexit he’d need to present another (emergency) Budget to deal with the consequences that would ensue. Today, he half-heartedly announced that cash available for no-deal preparation would be increased to £2bn, increasing the amount announced at 2017 Budget by a further £500k, but gave no further detail on any preparations that would be made. He acknowledged that more would be needed if no-deal did materialise, commenting that he had kept borrowing headroom in reserve for this eventuality.
The Chancellor also talked about a ‘deal dividend’ – saying that the planned 1.2% real terms increase in public spending would be higher if a deal was reached. Overall, though, the statement did little to quantify the impacts; we know that borrowing will be higher than forecast if there’s no deal, and spending will be higher than promised if there’s a deal, but we have no idea how much higher.
After the recent move of the Budget statement from the spring to the autumn, Hammond was already preparing the ground for upgrading the spring statement to a ‘full fiscal event’ (i.e. a Budget) depending on the outcome of the Brexit negotiations. But for those who are already sick of the Brexit saga, even this timing might be optimistic as the idea of extending the Article 50 process or transition period in order to agree a deal is being more widely floated in European circles.