Autumn Statement 2016 by Rob Weaver

by Heather Dandridge  yesterday at 11:43

Autumn Statement 2016 by Rob Weaver

This was Philip Hammond's first and last Autumn Statement due to his announcement to abolish Autumn and Spring's Statement in the future. Hammond has developed a reputation for thinking like an "accountant" but, unlike the stereotype, he has certainly untied the purse strings.

The key figure at the heart of the Autumn Statement is the additional £122bn the government is now forecast to borrow over the next five years. The total UK debt could be close to £2 trillion by 2020 and government debt is due to peak at 90.2% of GDP in 2017-18 - the highest it has been for 50 years.

Many Brexiters have seized on the perceived negative assumptions used in the Office of Budget Responsibilities (OBR) forecasts. On closer inspection of the report, the OBR, in their own words, had "no privileged information on negotiations" and they stated that it is "impossible to predict the precise outcome" so, this is a large "guesstimate". Whether the forecasts are optimistic or pessimistic remains to be seen but do not be surprised if the figures for both growth and borrowing are significantly out.

The previous Chancellor had a habit of pulling "a rabbit out of the hat". There was no rabbit and maybe even no hat. With the next election due in 2020, perhaps he is getting the bad news out of the way now.

Some of the JAMs (Just About Managing) had good news: the increase of the living wage; tax allowances still increasing as planned and then increasing by CPI from 2020; that lack of increase in fuel duty, which can save an average driver £130 a year; the banning of tenant letting fees; and minor changes to Universal Credit. The downside is the insurance premium tax will increase to 12% from 10%.

In a perceived divided nation of Remainers and Brexiters, most would agree the negotiations and the outcome of the UK exiting the EU are crucial to the British economy and will affect budgets for years to come. I spoke to an accountant recently and, as she said, "We live in interesting times!" There will undoubtedly be challenges and obstacles along the way in the Brexit negotiations. But I remember a quote from Nelson Mandela who said, "It always seems impossible until it is done." Perhaps this is something to reflect on over the coming months.
 
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