Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses aspects of the forthcoming Autumn Statement, due on 5 December…
It is universally expected that the accompanying economic growth forecasts by the Office for Budget Responsibility will be significantly downgraded as growth has disappointed since the March Budget. Reflecting the weaker economic performance, the public finances are deteriorating, which has implications for both of the Chancellor’s fiscal rules. Concerning the Fiscal Mandate it is likely that the balancing of the cyclically-adjusted current budget will be achieved in FY2017 rather than in FY2016. But Mandate will still be “met”. The Supplementary Target, fixed for FY2015, will probably be missed.
The Autumn Statement is expected to be fiscally neutral. Policy announcements can be expected on taxes (with a possible increased burden for the “rich”) and spending (focussing on welfare benefits).
Ruth Lea said “the Autumn Statement is an opportunity for the Chancellor to take stock and reassess policies to stimulate growth. Whilst there have been some helpful decision for business, including the cuts in corporation tax rates, supply side policies generally need to be far more radical. In particular, more needs to be done to de-regulate and the high-cost energy policy is an unnecessary own goal.”