Autumn Statement 2016: What to expect

The Autumn Statement is due to be delivered by Philip Hammond next Tuesday (November 23rd), and there has been a lot of speculation over what UK citizens can expect. The Autumn Statement is an annual report by the Chancellor updating the public on the country's taxation and spending plans. The future of Britain’s relationship with the EU and the weakening of the GBP reinforces the importance of this year’s Statement. 

Challenges for the OBR: 

The Office for Budget Responsibility (OBR) provides independent economic forecasts for the next 5 years of the UK economy. They are expected to release a forecast on Tuesday, soon after the Autumn Statement. 

This year will prove particularly challenging to the OBR given the level of uncertainty surrounding government policy, especially regarding Brexit strategy. The OBR, however, will be showing its workings to shed light on how they calculated their predicted figures despite this lack of political and economic foreseeability.  

Brexit: 

The BBC interviewed several business owners across the UK and asked them what they would like to see Mr Hammond address in the Statement. All their responses include more clarity regarding Britain’s position in terms of a Brexit agreement, a thought that most the UK public can empathise with. Furthermore, in the infrastructure industry, business owners would like confirmation of access to the single market as they fear they would struggle to find skilled labourers without access to EU workers. The Prime Minister, Theresa May, has expressed support for free trade agreements, and this may lead to the Statement indicating plans to reach an agreement to facilitate access to the single market. 

Corporation tax:

Before his dismissal, Former-Chancellor, George Osbourne, expressed plans to further reduce the corporation tax from 17% to 15%. This was intended to retain London’s status as the home to a significant number of large businesses following Britain’s decision to leave the EU. The threat of Brexit saw several companies threaten to move their headquarters to other countries, such as Ireland – where their 12.5% corporation tax and position as an EU Member State is desirable. However, Hammond has suggested that he has no intention of further reducing corporation tax, which was 20% before the Budget earlier this year. This may indicate the Chancellor’s faith in a strong post-Brexit Britain. 

National debt:

Differing from his predecessor again, Hammond has indicated that the nation may seek to borrow in order to survive an inevitable post-Brexit depression, before it regains its strength. Spectators will be looking at whether this increase in borrowing will lead to a move away from the Party’s policy of austerity. 

Investment:

There have been strong hints towards an increase in funding for infrastructure in the coming year, which was requested frequently by those interviewed by the BBC. The increased demand for better quality roads and railways has pushed the possibility of investment into this area, which will be well received by many. 

There has also been a lot of demand for investment into healthcare, particularly the NHS and mental health services. This has proved a highly controversial area for the government and Leave campaigners following the well-publicised bus scandal, in which the Leave campaign mislead the public that it would invest in the NHS with the money no longer going to the EU. 

What’s to come in the Autumn Statement is very much speculative, but what is certain is that the nature of the plans for the UK budget will rely heavily on Hammond’s faith in a post-Brexit Britain. The UEACA Society will be making a follow-up post next week summarising the Statement and its implications for the future of Britain.

- Ellie Dobbyne