Philip Hammond leaves 11 Downing Street to deliver his Autumn Statement to Parliament today
Hammond is expected to announce a series measures designed to boost living standards of lower earners, as the Treasury aims to create an “economy that works for everyone”.
Here are the latest developments:
• Hammond opened the statement by saying the IMF predicts UK will be the fastest growing major economy in the world this year, but said the historic Brexit decision “makes more urgent than ever the need to tackle our economy’s long term weaknesses”. Hammond said: “Our task now is to prepare our economy to be resilient as we leave the EU”
• Hammond says the OBR thinks growth will be 2.1% in 2016, higher than forecast in March. In 2017, it will slow to 1.4% on lower investment and consumer demand driven by uncertainty and higher inflation. Growth will be 1.7% in 2018, 2.1% in 2019/2020, 2% in 2021. The referendum decision means growth will be 2.4 percentage points lower than would otherwise be the case. He cannot predict the deal the UK will strike.
• The UK’s 2017 forecasts are equivalent to Germany and higher than many neighbours including France and Italy, “a source of considerable irritation to some.”
• Hammond confirmed he is ditching George Osborne’s flagship policy of returning to a budget surplus within this Parliament. Hammond said instead he wants public finances to be returned to surplus ‘as early as possible in the next Parliament.’
• Labour market to remain robust. OBR predicts 500,000 jobs created over forecast period.
• Some external bodies have called for fiscal expansion, while others have said it’s not necessary, says Hammond. Debt is forecast to peak at 90.2% this year before tailing off. Hammond says his own sober analysis leads him to prioritise additional high value investment in infrastructure and innovation.
• He’s launching a National Productivity Fund of £23 billion over five years to be spent on innovation and infrastructure. We don’t invest enough in R&D, he says, and the UK must build on strengths in technology and innovation.
• Hammond announced a new £2.3 billion housing infrastructure fund to deliver infra for up to 100,000 new homes in areas of high demand, and a further £1.4 billion to deliver an extra 40,000 affordable homes.
• On transport, he commits significant additional funding in networks and vehicles of the future. £220 million to address traffic pinchpoints, £390 million to help development of low emission vehicles.
• There’ll be £740 million spent on developing broadband fibre connections and 5G.
• Economic growth has been too concentrated in London and the south east, he says. No other major economy has such a gap in productivity between its capital and regions.
• Even before the Autumn Statement begun, it was having an effect. Shares in big UK estate agents felt the pinch ahead of the Chancellor’s clampdown on estate agency fees on rental tenants.