Philip Hammond opened on Wednesday with an unusual foray into comedic territory. Teasing the nation with a statement that at first seemed like a resignation, he began “”This is my first Autumn Statement as Chancellor. After careful consideration, and detailed discussion with the Prime Minister, I have decided that it will also be my last.” However, he then added the real reason for this would be because there would be no more Autumn statements, ever. “I am abolishing the Autumn Statement”, said triumphantly as the playful wording revealed itself.
The bold, decisive opening may well be designed to give the impression that Mr Hammond has control over the whole ‘post-Brexit’ debacle, as what followed was anything but under control. The government is now likely to spend around £122 billion more than previously expected, and the level of economic uncertainty for the next five years is at a high.
Launching into the statement, the Chancellor outlined a list of readjustments on a grand scale, that could potentially impact the British economy for decades. Here they are in full:
Lower Pay Growth
The figure for UK workers’ average weekly earnings is expected to be at £518 the start of 2021; £15.20 less than was originally forecast in March 2016.
Lower GDP Growth
GDP growth has been revised down by 0.8 percentage points in 2017, 0.4 points in 2018, and is unchanged in 2019/20.
Slowed Reduction on Benefits
The Universal Credit taper rate, which limits the value of household benefits received will be reduced from 65% to 63% from April 2017, meaning people will receive slightly more of these benefits than expected.
Mr Hammond did acknowledge the need to support ‘Just managing families’ in line with the policies of the Prime Minister. The measures however, are unlikely to make a great differences to these families. Aside from the reduction on the Universal Credit taper rate, fuel tax is going to be frozen to help lower the cost of living, whilst the government continues to crack down on tax avoidance, “ensuring everyone plays by the same rules.”
All in all these changes probably carry the most benefits for the government’s pocket. Higher inflation, as a result of the pound plummeting shortly after the referendum, means that the government will likely see greater savings than expected by 2020.
What these changes will mean to the economic outlook surely remains to be seen, as the factors at play are all but under the governments, and certainly not under Mr Hammonds, control.
Dan Cody is Editor-in-Chief at No Majesty.