The UK is set to grow faster than anticipated in 2019 and public borrowing levels will fall to multi-year levels as chancellor of the exchequer Philip Hammond claimed the era of austerity was coming to an end in the Autumn Budget. 
After prime minister Theresa May proclaimed the end of austerity in September, analysts and economists have been waiting for more detail in the chancellor’s annual update.
In yesterday’s Budget, Hammond reported that borrowing levels will be £11.6bn lower than forecast in the Spring Statement, representing just 1.2 per cent of GDP and is set to fall to £19.8bn by 2023-2024, its lowest level in 20 years.
As such, the government will meet its structural borrowing target three years early.
The chancellor noted: “I can report to the British people that their hard work is paying off and the era of austerity is finally coming to an end.”
Hammond said the Office for Budget Responsibility (OBR) had also upgraded its growth forecast for 2019 from 1.3 per cent to 1.6 per cent, falling back to 1.4 per cent in 2020 and 2021, 1.5 per cent in 2022 and 1.6 per cent in 2023.
Source: OBR
However, Rathbones head of asset allocation research Ed Smith said the end of austerity narrative “is just rhetoric” with the politically-neutral OBR’s report telling a different story.
“At best, one could say that fiscal policy won’t be getting any more austere in 2019-20,” said Smith.
“But the independently verified numbers clearly show that ‘the cyclically-adjusted current budget deficit’ – day-to-day net spending adjusted for pulse of the business cycle and the standard international gauge of fiscal thrust or drag – will tighten again from 2020-21.”
Laith Khalaf, senior analyst at Hargreaves Lansdown, said despite an upgrade by the OBR was still “pretty lacklustre”.
“This paints a picture of an economy muddling through, and withdrawal from the EU clearly remains a risk in the immediate road ahead,” he said. “This is simply a continuation of the current trend, where the UK remains in a low growth, low interest rate environment. £420m spent on potholes isn’t going to dig it out of this rut, however a resolution on Brexit might deliver some much-needed momentum.”
There was some further detail on Brexit preparations, with Hammond highlighting a three-pronged approach to ensuring that the UK was prepared for all outcomes.
“We are at a pivotal moment in our EU negotiations and the stakes could not be higher,” the chancellor said. 
“Get it right and we will not only protect Britain’s jobs, businesses and prosperity but we will also harvest a double ‘deal dividend’: a boost from the end of uncertainty; and a boost from releasing some of the fiscal headroom that I am holding in reserve at the moment.”
While Hammond said he remained confident that the UK government would seal a deal delivering such a ’dividend’, he warned against complacency.
As such, he announced a further £500m – on top of £3.7bn in already-announced commitments – for departments to prepare for Brexit, the first prong.
Secondly, the chancellor revealed that he would maintain headroom for his fiscal rules to retain firepower “if the economy needs more support in the coming months”.
Lastly, Hammond (pictured) said should the economic or fiscal outlook change materially in-year, he will take whatever action is appropriate including upgrading the 2019 Spring Statement to an emergency Budget.
Yet, Edward Park, investment director at Brooks Macdonald, said irrespective of the Budget announcements, “political risk looks set to continue to dominate UK economic and investor sentiment until clarity on Brexit is provided”.
He said: “A transition deal still provides the best avenue for the government to boost the economy and we agree that the economy will benefit from a ‘deal dividend’ if a Brexit deal is reached.
“Although our central expectation remains that a last-minute deal will be reached, we are unable to hold high conviction in this thesis given the large number of binary political factors involved.”
There were some unexpected tax giveaways, as Hammond revealed that the tax-free personal allowance would rise to £12,5000 a year earlier than planned in April 2019.
The higher rate threshold will also increase to £50,000 from £46,350 from April.
Yet, there was little in the Budget from an investment perspective.
The ISA annual subscription limit remained unchanged at £20,000, while Junior ISA subscription limits rose in line with CPI (consumer price index) rate of inflation to £4,368.
Lifetime allowance for pensions also increased with CPI to £1,055,000. Furthermore, the government announced that it will publish a consultation on draft regulations for maturing child trust funds, which has also seen its annual subscription limit increase to £4,368.
Indeed, there was little for investors to get worked up about.
“For personal investors if there was not much to see in the Budget itself perhaps the greatest interest will be in working out which companies may have seen their prospects enhanced by the Budget,” said Richard Stone (pictured), chief executive of The Share Centre. 
“Clearly those who serve the NHS, defence, infrastructure or housebuilding sectors should do well from increased government resources being spent in those areas.”
He added: “Overall, the Budget contained no great surprises other than the acceleration in the increases to income tax thresholds.
“The better than expected economic backdrop is good news for all and the reduction in income inequality was trumpeted on several occasions by the chancellor in his speech.
“There was though no recognition of the significant growth in asset or wealth inequality. There was no mention of savings and investment and while the government clearly expects people to have greater scope for saving and investing there were no further encouragements to do so.”
There were some other notable announcements within the Budget, however.
The chancellor confirmed that the use of private finance initiative programmes for future projects would be abolished, arguing that they offer neither value nor transfer risk to the private sector.
While honouring existing contracts, Hammond said “the days of the public sector being a pushover, must end”.
Another key highlight of the Budget was an additional £1.5bn in support for the high street retail sector, including a tax cut for smaller retailers valued at £900m and a £675m fund aimed at to improve transport links, redevelop empty shops as homes and offices, and to restore and reuse old and historic properties.
Additionally, the chancellor announced a 2 per cent digital services tax targeted on UK-generated revenues of profitable companies generating at least £500m in global revenues.
Such a levy will come into effect in April 200 and raise over £400m per year and is designed to target established tech giants rather than tech start-ups.
However, the UK will work with other countries for a globally-agreed solution what could replace the UK digital services tax.
“While the chancellor acknowledged that this was a global problem that probably requires a global solution, he has become impatient with the lack of progress and will press ahead with a UK tax,” said Luke Bartholomew, investment strategist at Aberdeen Standard Investments.
“There are many companies operating in this area and therefore the devil is likely to be in the detail.”