Spring Budget 2017

We look at the budget in terms of the impact on our clients from a personal finance perspective and also in terms of the effects on the assets they own through their portfolios with us.

In this budget, many changes were well flagged - which means the market reaction has been muted - and overshadowed by a broadly successful corporate earnings season, which we are in the midst of. Infrastructure play Hill and Smith posted strong results on Wednesday - and Philip Hammond's comments on some extra money to spend on road repairs are of course helpful - but the good numbers and outlook mean that analysts are raising earnings expectations in any event, providing a substantial boost to the shares.

Previous announcements, reiterated by the Chancellor, on further investment into Science, Technology, Engineering and Maths (STEM) have already boosted stocks exposed in this area, such as Abcam, which provides antibodies and other life-science research tools to universities and institutions for medical research. The confirmation of the 18p and 24p sugar levies on drinks, dependent on sugar concentration, are in line again with expectations, although we note a small relief lift in the share price of Nichols (makers of Vimto) since the announcement.

The OBR's projection of an increase in UK growth for 2017 will have only limited impact on client portfolios, given that many of our holdings are internationally diversified companies that look and plan years ahead. Co-ordinated global growth however is of course constructive. What happens beyond the budget - Brexit negotiations, US growth and interest rates, the transition to a consumer-based economy in China - is more important to our long-term investment approach.

From a personal finance perspective, the cut in dividend tax relief from £5,000 to £2,000 will of course make some difference. However, the tax shelter of ISAs remains, with the allowance rising from £15,420 in 2016/17 to £20,000 in 2017/18, encouraging further saving. National Insurance contributions for the self-employed will also rise, something we are sure to hear a lot about from our predominantly self-employed journalist community. The reaction has been vociferous from all sides of the political spectrum and from the press. The Chancellor reckons that he needs to capture taxes from the increasingly self-employed work force that work in the ‘gig economy’, but  it does seem counter to Conservative Party manifesto promises not to raise NI contributions.