Autumn Statement Overview

Buchanan watched the Autumn Statement in Parliament with interest and this year there was the added significance of it being the first real indication of the new Conservative government’s plans for taxes and spending.

As ever, we were particularly interested in how it has played out in the media, which topics are market movers and which have set journalists and social media commentators typing.

Things the media were looking out for prior to the Autumn Statement include:

  1.  The Office for Budget Responsibility forecast for the rate of growth of the UK Economy next year. This will be the first major indication of the impact of the EU referendum.
  2. Government borrowing. This has been foreshadowed by Theresa May stating that she would drop George Osborne’s goal to abolish the deficit by 2020.
  3. How the government has targeted a group they call the “Just about managing” families, or JAMs. Some policies were rumoured to be targeting this group in the run-up to the Autumn Statement, including a reported possible freeze in fuel duty, as petrol prices have gone up swiftly in the wake of the Brexit vote.
  4. Infrastructure spending. Philip Hammond has signalled that any fiscal stimulus in the Autumn Statement will be concentrated on boosting Britain’s roads and railways.
  5. John McDonnell’s rebuttal to the Statement and how he performs.
  6. In the aftermath of the Statement, attention has largely been focused on the following key measures:

 

Rate of Growth:

What Philip Hammond said:

The OBR forecast is that growth will be 2.1% in 2016 which is higher than the figure forecast in March. Meanwhile in 2017 the OBR forecasts that growth will slow to 1.4% driven by lower investment and weaker consumer demand. In the longer term growth forecasts will increase to 1.7% in 2018, 2.1% in 2019 and 2020, and 2% in 2021.

Media reaction…

Ben Chu ?@BenChu_ 

One of the key OBR judgements here: potential productivity growth revised down from March #AutumnStatement

 The Daily Telegraph: “Eurosceptics attack ‘doom and gloom’ Autumn Statement predictions from independent economic forecaster.”

 The Daily Mail: So much for Mr Gloomy! The elite said Brexit would spell apocalypse. Yesterday, an upbeat Chancellor predicted growth for the next five years (pity about the terrifying debt).”

 

Government borrowing:

 What Philip Hammond said:

The OBR forecast was revealed to be a budget deficit of £68.2bn in 2016 and £59bn in 2017. This is a considerable increase on the March estimates of £55.5bn and £38.8bn. Looking ahead, in the following years the figure will be £46.6bn for 2018/2019, then £21.9bn for 2019/2020, and finally £17.2bn for 2020/2021.

Media reaction…

Ben Wright ?@_BenWright_ 

How Brexit could change the UK’s borrowing costs, according to the OBR. Not pretty.

The Guardian: “Brexit will blow £59bn hole in public finances, admits Hammond.”

The Daily Mail: “What happened to the idea of living within our means?”

 

JAMs:

 What Philip Hammond said:

Philip announced a range of measures for “Just about managing” families including that personal allowance will rise to £11,500 in April next year and to £12,500 by end of the parliament. Additionally, National Living Wage will increase to £7.50 next April. He did however raise insurance premium tax to 12%.

Media reaction…

The Economist ?@TheEconomist 

Why JAM is the word of the day for Philip Hammond’s #autumnstatement

James Quinn ?@jamesrquinn 

That insurance premium tax increase brings in £4bn over five years from June 2017 #ouch

steve hawkes ?@steve_hawkes 

Insurance Premium Tax to rise from 10% to 12% – a 20% hike that will all but negate the fuel duty freeze. Affects almost everyone

The Daily Mail: ‘It’s not all about salary. This is an attack on loyalty!’ Middle class tax perks including mobile phones, company cars and health care are raided to raise £1billion.”

 

Infrastructure:

 What Philip Hammond said:

There will be a new national productivity investment fund of £23bn; additional investment in R&D is scheduled to be £2bn by 2020, £390m to be invested in low emission vehicles, £450m to trial digital signalling on railways; and of course a new £2.3bn Housing Infrastructure Fund for infrastructure to build new homes of up to £100,000 in high demand areas.

Media reaction…

Peter Campbell ?@Petercampbell1 

Electric car charging points could outnumber petrol stations by 2020 after £80m rollout boost in #AutumnStatement

 Philip Aldrick ?@PhilAldrick 

That £2.3bn infrastructure fund for housing was already announced

 Financial Times: “UK pins post-Brexit hopes on boosting infrastructure”

 City A.M.: “Was the Autumn statement a missed opportunity to tackle Britain’s housing crisis?”

 

Phillip Hammond’s Performance:

Perhaps the biggest surprise was that in contrasts to some of Philip Hammond’s predecessors, there were actually no headline ‘rabbit out of the hat’ moments on the day!

Media Reaction…

Allister Heath ?@AllisterHeath 

My column — Brexit Britain needed a radical vision, but timid Hammond played it safe http://www.telegraph.co.uk/business/2016/11/23/brexit-britain-needed-radical-vision-timid-hammond-played-safe/?WT.mc_id=tmg_share_tw … via @telebusiness

Robert Peston ?@Peston 

So by leaving EU we seem somehow to have become France – high debt, low growth, betting all on infrastructure. A bit odd #AutumnStatement

Financial Times: “Chancellor puts a brave face on brutal forecasts”

 City A.M.: “Steady as she goes from spreadsheet Phil.”

 The Daily Telegraph: “An Autumn statement long on caution, short on vision.”

 The Guardian: “The autumn statement: half right, half wrong.”

 

No doubt commentators will continue to pick over the minutiae in the coming days and since Philip Hammond also announced that his first Autumn Statement would be his last, with the abolishment of the event, they will be watching the full ramifications of the Statement even more closely.

24 November 2016