Autumn Statement (Part 1)

Ah, yes autumn - here to amuse us yet again. The smell of the leaves on the ground. The excitement of Christmas around the corner. The widespread press extravagances in claiming we face the coldest / wettest / snowiest weather since the ice age. And my particular favourite, the disappointment of another bland Autumn Statement from an equally bland Chancellor.

 

Autumn 2015, you have not failed to deliver. 

 

The 2015 Autumn Statement was the fourth Budget / Statement in a year (forgive me for enjoying the political / economic overload!). The Autumn Statement is designed to be a spending review and provide a 5 year projection of Government spending. In effect, it decides how £4 trillion of taxpayer money will be spent by setting caps on Government departments and meeting the huge £80 billion budget deficit……yet at the same time trying to pacify the baying public who want better services not inferior ones.

 

You see, Osborne has backed himself into a corner as his economic calculator is missing its target and the budget deficit is not reducing by the targets he set himself. To meet these targets huge cuts are needed……

 

But then along came the Office for Budget Responsibility to rescue him……and the huge cuts we were expecting weren’t needed and the public slating will have to wait for another time.

 

Here’s why……

 

The Office for Budget Responsibility is an advisory body that provides ‘independent’ economic forecasts and 'independent' analysis of the public finances as background preparation to the UK budget. Rather than announce projections of future economic growth that would warrant the need for massive slashing of costs, it instead announced rosier than expected finances and projections. As a result, the reduction in spending and associated savings could be reduced (to the tune of £27 billion) meaning a u-turn on tax credit cuts and the preservation of the policing budget.

 

It’s fair to say that George used his ‘get out of jail free card’ today and avoided a huge public mauling.

 

Time will tell if the Office for Budget Responsibility projections are realistic as unfortunately, we have no ‘get out of jail free card’ to play.

 

We shall see.