The Autumn Statement 2016

– 24th November 2016

Philip Hammond described this statement, as a plan to ensure the UK economy is “match-fit”.

Following the Chancellor’s delivery of the Autumn Statement, fierce debate broke out on social media over whether Brexit is to blame for the UK’s “sober” economic outlook.  According to the Office for Budget Responsibility, the national debt is expected to increase by £220bn over a five-year period, taking the total to £1.945 trillion by 2021. Mr Hammond also outlined that due to a new, softer approach to eradicating the deficit, debt will peak at 90.2% of national income by 2018.

Here are some of the more important aspects of the statement:

Public borrowing/deficit/spending

• Government finances forecast to be £122bn worse off in the period until 2021 than forecast in March’s Budget
• Debt will rise from 84.2% of GDP last year to 87.3% this year, peaking at 90.2% in 2017-18
• Office for Budget Responsibility (OBR) forecasts borrowing of £68.2bn this year, then £59bn in 2017-18, £46.5bn in 2018-19, £21.9bn in 2019-20 and £20.7bn in 2020-21
• Public spending this year to be 40% of GDP – down from 45% in 2010
• Departmental spending plans set out in 2015 Spending Review to remain in place
• Government will meet commitments to protect budgets for key public services, defence, overseas aid and the pension “triple lock” until the end of this Parliament

The state of the economy

• OBR growth forecast upgraded to 2.1% in 2016 – from 2.0% – then downgraded to 1.4% in 2017, from 2.2%
• Forecast growth of 1.7% in 2018, 2.1% in 2019 and 2020 and 2% in 2021.
• Government no longer seeking a budget surplus in 2019-20 – committed to returning public finances to balance “as soon as practicable”

Taxation/pay

• Income tax threshold to be raised to £11,500 in April, from £11,000 now
• Higher rate income tax threshold to rise to £50,000 by the end of the Parliament
• Tax savings on salary sacrifice and benefits in kind to be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycling
• National Living Wage to rise from £7.20 an hour to £7.50 from April next year
• Employee and employer National Insurance thresholds to be equalised at £157 per week from April 2017
• Insurance premium tax to rise from 10% to 12% next June

Welfare

• Universal Credit taper rate to be cut from 65% to 63% from April at a cost of £700m
• No plans for further welfare savings in this Parliament