Autumn Statement 2013: Does good news for George spell good news for the rest of us?
As part of our preview of Autumn Statement 2013, David Bennett, tax partner at Moore and Smalley offers his thoughts on what Mr Osborne will announce on Thursday this week.
It has been a long time since a Chancellor has been able to report some good news for the economy. We can rest assured that he will use the Autumn Statement to remind us of the recently announced growth figures. Annualised GDP growth of 3.1% for the last quarter puts us at the top of the G7 table. Added to that, the working population is now 30 million, its highest ever. Income tax receipts are rising; Job Seekers Allowance payments are falling. It should all help towards reducing the deficit.
But if anyone is hoping for tax cuts or a boost to public spending, they are likely to be disappointed. We are less than half way through the Chancellor’s austerity programme, so unless growth figures exceed his expectations, our expectation should be for more of the same.
A closer look at the growth figures shows that the latest spurt is fuelled by consumer spending. Mortgage applications and credit card lending are both up, despite wages being more or less the same. Exports, on the other hand, actually fell, and although there was an increase in business investment, it was mainly attributable to the build up of inventories.
Mr Osborne will therefore need some innovative policies to drive investment and growth, without increasing spending. He also needs to address the issue of why bank lending to businesses is falling while home loans are up.
Removing some of the administrative burden from businesses so that they can focus on their main activity would also help. Would an Autumn Statement that contained no tax changes at all be too much to hope for? Probably. I will use my next three blogs to outline some of the changes we can expect.