The Autumn Statement 2023: Key areas of impact

Source: The Guardian November 2023

The Autumn Statement was announced on 22nd November 2023 by Chancellor of the Exchequer Jeremy Hunt.

Below we’ve listed the key areas of impact.

Growth

Forecasts from the Office for Budget Responsibility show the economy will grow by 0.6% this year and 0.7% next.
The economy is now 1.8% larger than it was before the Covid-19 pandemic, according to the official figures, he says.
GDP will then grow 1.4% in 2025, and 1.9% in 2026 and 2% in 2027 and 1.7% in 2028.
In March, the OBR had forecast the economy would shrink by 0.2% in 2023, before growing by 1.8% in 2024, 2.5 % in 2025, 2.1% in 2026 and 1.9% in 2027.
The wider picture of “slower growth from a higher starting point” means that compared with March, the OBR only improved its forecast for GDP growth in 2027 by 0.6%.

Inflation is expected to fall to 2.8% by the end of 2024 according to the spending watchdog, down from 11.1% last year when Hunt and Rishi Sunak took office.
The spending watchdog now expects inflation to stay “higher for longer” and that it will not drop to the Bank of England’s target of 2% until mid-2025. This is a year later than it expected in March.
Higher inflation will keep interest rates elevated, the OBR says. It expects the central bank’s key interest rate to stick at about 4% until 2028, rather than drop to 3%, at it predicted in the spring.

The biggest set of welfare reforms in a decade will be made and will get 200,000 more people into work.
People claiming benefits will face mandatory work experience if they do not find a job within 18 months.
As pre-announced, the “national living wage” will increase by more than a pound an hour from April to £11.44. It will also be extended to 21-year-olds.
Benefits will be increased by 6.7%, and there will be tougher requirements for those who claim them to look for work.
The state pension will be increased by 8.5%.
Local housing allowance will be increased, which has been frozen since 2020, in a measure worth £800 for some households next year.

So-called “full expensing” will be made permanent. This allows businesses to offset investment in items such as new IT equipment and factory machinery against tax.
The chancellor adds that the total package of measures will help increase business investment by about 1% of GDP.
Hunt says he wants to reform taxes paid by self-employed people, and will abolish their “class 2” national insurance contributions, which count towards their state pension entitlements. This will cut taxes for 2 million people, he says. “Class 4” contributions will be cut by one percentage point. Together these will be worth £350 a year.
There will be a business rates discount for hospitality retail and leisure worth £4.3bn.

An extra £4.5bn will be invested between 2025 and 2030 in manufacturing.
About £1m will go to aerospace companies and businesses working on green technologies.
Recommendations will be accepted from a review of foreign direct investment into the UK, carried out by former business minister Lord Harrington.
There will be a new “investment zone” in Wrexham, Wales, in a bid to increase employment in the area. There will be three others in England: Greater Manchester, and the west and east Midlands.
Options will be explored for the sale of some of the government’s stake in NatWest. This will be done through a “retail share offer”.

The main 12% rate of employee national insurance contributions will be cut by two percentage points to 10%.
This tax cut will be brought in from 6 January 2024, the chancellor says.
This will affect 28 million people, saving someone on the average salary £450.

Government spending on public services will take a “responsible approach” and focus on “tackling waste”.
The measures will result in a £19bn reduction in spending on public services, after accounting for inflation.

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