Belfast Telegraph

Sunday 23 November 2014

Autumn Statement 2013: Expect an upbeat mood and vote-winning moves

Angela McGowan, Danske Bank Chief Economist, takes a look at what's ahead, following the Autumn Statement

Chancellor George Osborne delivers his fourth Autumn Statement this week
Chancellor George Osborne delivers his fourth Autumn Statement this week

This Thursday, the Chancellor George Osborne delivers his fourth Autumn Statement and the tone this year should be distinctly different from last year's.

This time around, he will begin his statement by telling the nation that Government GDP growth forecasts have been revised upwards, not downwards and, contrary to last year, expectations for Government borrowing will be forecast to start declining.

The recovery of the UK economy has taken everyone by surprise – not least the Office of Budget Responsibility and the Chancellor himself. With GDP growth this year coming in at around 1.3% and expected to reach 2.2% in 2014, there is a reasonable chance that the Chancellor will pull a couple of pre-election stunts on Thursday to woo voters ahead of the next general election in 18 months' time.

BUSINESS:

When it comes to industry, the Government's Autumn Statement cannot simply be about bashing energy companies, telecoms companies, the banking sector and possibly even rail transport providers. The Government needs industry to provide jobs, to pay corporation tax, to engage in world trade and to create wealth – so there has to be a number of initiatives to support business.

Apprenticeships are also expected to feature in Thursday's statement and it is anticipated that companies will be allowed to claim Government subsidies for apprenticeships through their tax returns. Getting credit flowing to SMEs is essential for sustaining the recovery, and the recent announcement about focusing the Funding for Lending Scheme on business lending only goes some way to support business growth.

HOW WILL HE PAY?

Although Mr Osborne's borrowing requirement fell by £200m in October, he will still be mindful of the fact the UK has one of the highest budget deficits in the EU.

So, it is widely anticipated that the Autumn Statement will be fiscally neutral – essentially any give-aways must be paid for. Besides some under-spend from Whitehall Departments, revenue streams could be sought from a number of sources, which include: buy-to-let landlords, foreign property owners, large property purchasers, higher income tax payers and of course, the usual Conservative government target – benefit recipients.

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