What the spring statement means for investors
Up until very recently, we had autumn statements and spring budgets. Thanks to Philip Hammond, it’s now the other way round and it’s tempting to wonder whether this may have been because he looked at the (proposed) Brexit date and decided that he didn’t want his main budget being overshadowed by the UK’s exit from the EU. It might also have been because he wanted to analyse the impact of Brexit before setting his main budget. Whatever the reason, the spring statement was a case of moderate updates rather than big announcements, there was, however, interesting news for investors.
No Easter bunnies but good news for eco-minded investors
Investors hoping for some major Easter goodies from the Chancellor are going to be very disappointed, but those with more realistic expectations from a man facing Brexit could actually be quietly pleased, especially if they are interested in combining investment returns with environmental sustainability. Possibly the biggest takeaway point is the fact that the government will launch a global review into the Economics of Biodiversity, basically, the government has announced that it is actively looking for means to promote biodiversity while increasing economic prosperity. The government also reconfirmed its commitment to preventing climate change and encouraging green energy and while this is nothing particularly new, it’s a good reminder to investors that any new technology which helps to reduce carbon emissions has the potential to be a great investment.
Infrastructure remains a high priority
The European Investment Bank has long played a major role in the development of the UK’s infrastructure, but that will come to an end when Brexit is implemented and therefore it is to be presumed that the resulting gap will be filled by the private sector supported by the government. To this end, the government has already published a consultation on Infrastructure Finance and has committed to publishing a comprehensive National Infrastructure Strategy. Obviously, investors will have to wait to find out the exact contents of this latter document, however, based on previous actions taken by this government along with other points in the spring statement, it would seem probable that it would include the likes of housing, transport connections and improved digital connections, both in cities and in rural areas. Again, these could all provide exciting opportunities for investors.
Regulating financial services
The financial services industry has been quite open about its dislike for Brexit and ever since the Leave vote was announced there have been numerous questions about what it will mean for “the city”. The spring statement doesn’t provide any clear answers to this and, to be fair, it couldn’t really have been expected to.given that there is still a conspicuous lack of clarity around Brexit, but it does give a clear indication of the future direction of travel. There will be a consultation later in the year after which the government will take the necessary steps (presumably legislative and otherwise) to “maintain world-leading financial services regulatory standards” following Brexit, to “remain open to international markets and realise new trading opportunities”. This would appear to include measures to ensure that international regulators are happy with the responsibility, security and transparency of the UK financial sector. On a side note, the government has also announced that as of June 2019, citizens of the US, Canada, New Zealand, Australia, Japan, Singapore and South Korea will be permitted to use e-gates at UK airports and at Eurostar terminals and that landing cards will also begin to be abolished starting from this date. This change would appear to be aimed at reducing the likelihood that Brexit-related administrative delays would deter people from travelling to the UK for work or pleasure. This should all be reassuring news to anyone currently invested in the financial services sector (or indeed transport).