Comment by Felix Denton
The always enthralling (hint of sarcasm) Autumn Statement was read to the House last week by Chancellor of the Exchequer, Rt Hon George Osborne. In a confident performance from the Chancellor (certainly compared to his Shadow, Ed Balls), the general spirit of the statement was: brace yourself, there is more pain to come.
Again the Office for Budget Responsibility has been forced to revise its growth predictions downwards, admitting that by the end of this year the UK’s GDP will have actually shrunk by 0.1 per cent, while only the smallest amount of growth is predicted for the next period. N.B. since the recession started the OBR’s predictions have all been erroneously optimistic.
Osborne went on to declare that the period of austerity is going to be extended to the year 2017/18, and that by 2014 both Whitehall departments and local authorities are going to have to reduce their spending by a further two per cent. It is estimated that in 2018 Government spending will have dropped by almost 10 per cent since the onset of the Coalition’s deficit reduction programme. Unemployment is also set to rise throughout this parliament.
More cuts in welfare are meant to save an extra £3.7bn. Child benefit and the state pension will both be increased by one per cent, but, taking inflation into account, in real terms this amounts to a cut. There is also a bit of a squeeze on the rich: a one per cent rise in the higher tax rate, and, after a deal with the Swiss authorities over undisclosed bank accounts, the Exchequer confidently expects a further £5 billion in unpaid tax revenue.
Osborne’s good news story was the scrapping of the 3p increase in fuel duty (repeatedly trailed by Labour), though my hunch is that he’s only doing this to gain a few positive headlines; by January it may be back in the policy pipeline.
Bad news for the City is that the UK is in danger of losing its triple A credit rating. There’s so much that doesn’t add up (the growth that isn’t there; public spending cut to ‘almost inconceivable’ levels) you could hardly blame the international money men for moving to sunnier climes – anywhere without Britain’s big chill on the economy.