The, just passed, Conservative Party Conference may lead some to conclude that the new government is quite different to the immediate past one. Fundamentally different.
The world it is operating is different. Thanks to the vote for Brexit, it’s an even more uncertain one, despite what some may strive to tell you based on economic performance since the vote.
On the big questions, like “what sort of Brexit will we get?” there is uncertainty and on the questions that the financial planning and financial services will have a direct interest in …there is uncertainty.
Most will accept, as pretty much ever was the case, that fiscal (broadly, tax) policy will be influenced if not heavily determined by (self -evidently) the political views of the ruling party and also the performance and predicted future performance of the economy.
Politically the Prime Minister has made a big play for the centre ground. This was clear before the party conference, actually from her first day in office when she made her maiden speech as PM outside Downing Street. At the conference she put her position beyond doubt.
Here are some extracts from her Conference speech:
“Our economy should work for everyone, but if your pay has stagnated for several years in a row and fixed items of spending keep going up, it doesn’t feel like it’s working for you.
“Our democracy should work for everyone, but if you’ve been trying to say things need to change for years and your complaints fall on deaf ears, it doesn’t feel like it’s working for you.
“And the roots of the revolution run deep because it wasn’t the wealthy who made the biggest sacrifices after the financial crash, but ordinary, working class families.”
“If you’re well off and comfortable, Britain is a different country and these concerns are not your concerns. It’s easy to dismiss them – easy to say that all you want from government is for it to get out of the way but a change has got to come.
“It’s time to remember the good that government can do. Time for a new approach that says while government does not have all the answers, government can and should be a force for good; that the state exists to provide what individual people, communities and markets cannot.”
“People with assets have got richer,” Mrs May said. “People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer. A change has got to come. And we are going to deliver it.”
It couldn’t be much clearer could it?
Inclusiveness. And this, over the course of the parliament, to the extent that it doesn’t damage the economy, you could expect to see some redistributive tax measures.
So what of the economy? Well, most seem to accept that after a pretty stellar post Brexit vote performance, the forecast going forward are pretty much uniformly pessimistic. There are exceptions – and given the inherent uncertainties …no one can truly know.
We do know that even before officially becoming Prime Minister, Theresa May had said that the government would no longer seek to reach a surplus by 2020. This was, as you will recall, a key target of the previous Chancellor.
The current Chancellor is accepted as being less “showy” than the last and his policies, aligned to the general overriding narrative are likely to reflect that. As for the Bank of England, the Chancellor seems committed to “doing whatever is necessary to keep growth from suffering too much”.
Monetary and fiscal policy have both been considered. The former in the shape of QE and low interest rates. Detail on the latter will be clearer on 23rd November – the date of the Autumn Statement.
Early in his time as Chancellor Mister Hammond said the following,
“Over the medium term we will have the opportunity with our Autumn Statement, our regular late year fiscal event, to reset fiscal policy if we deem it necessary to do so in the light of the data that will emerge over the coming months.”