Autumn Philip or Fillip?

 

Today’s Autumn Statement was the first major economic announcement since the Brexit vote. So it was a pretty big deal……a bigger deal than normal. What we got was a Chancellor keen to blame the Brexit vote for all actions he announced, coming exactly 5 months since the vote result. There were no big giveaways. No rabbits out of hats. He effectively had a ‘get out of jail free’ card that he played very firmly.  

 

So what did we learn?

 

Economic Forecast

As expected, forecasts are to slow, based on the Office For Budget Responsibility’s independent assessment. GDP is now forecast to be:

 

1.4% in 2017 (down from 2.2%)

 

1.7% in 2018

 

2.1% in 2019

 

2.0% in 2020

 

All in all, pretty sluggish forecasts in summary.

 

Public Debt

Poorer economic forecasts mean that there will be less tax revenue for the Government and this will result in higher borrowing. In fact, Philip Hammond announced that the Government will no longer follow the course of George Osborne and look to swing the deficit into a surplus by 2019 but instead will increase public debt from 84% of GDP to 90% of GDP by 2017/2018.

 

Investment

A fund of £23 billion will be created over the next 5 years to pay for “high value investment” in Infrastructure and Innovation. The devil will be in the detail as to which areas of the country will benefit and which sectors.

 

Tax

George Osborne’s planned reduction of Corporation Tax to 17% is to remain to give the UK an advantage over many other leading economies. There was also confirmation that the planned increases in the tax free personal allowance will continue and will grow to £12,500 by 2020 (it will be £11,500 from April 2017).

 

However, these will be paid for by:

 

-       Insurance Premium Tax on car, home, etc. insurance to rise from 10% to 12%

-       The majority of salary sacrifice schemes offered by employers will be abolished.

 

Selected Other

Free childcare will increase from 15 hours to 30 hours per week from September 2017.

 

The National Living Wage for the over 25’s will increase from £7.20 to £7.50 per hour from April 2017.

 

Estate Agency fees to be abolished on rental contracts.

 

A new pension bond will be available for those in retirement and will be launched next year by National Savings & Investment (NS&I). It is likely to be an interest rate of 2.2% per annum over a fixed term of 3 years.

 

Fuel Duty rises at the garage forecast will be scrapped for the 7^th consecutive year.

 

Conclusion

Every so often, a Budget or Autumn Statement comes along that breaks seriously bad fiscal news. This is one of those occasions. The forecasts confirm that there will be a £220 billion increase in national debt by the end of parliament to a staggering £1.945 trillion. Huge Brexit impact on public figures……worse than feared. Who truly understood that back in June?

 

It will make many look at the last 6 years of austerity, public service cuts and redundancy and ask…..what was the point when the promise of an ‘economic surplus’ has been scrapped at the first opportunity?

 

Not too many positive announcements to cling on to.