Chancellor Jeremy Hunt is standing in the House of Commons to deliver a crunch Autumn Statement, with Rishi Sunak’s Government eager to repair Britain’s reputation for fiscal discipline after September’s disastrous mini-budget.
Hunt has said his priority will be to fill what the Government describes as a £55billion ‘black hole’; a figure derived from its own fiscal rules in efforts designed to demonstrate prudence.
To fill this hole, it has been rumoured that nearly every tax imaginable will rise, while Government spending is likely to be cut or frozen at current levels.
Markets will also be keeping a close eye on impending Office for Budget Responsibility forecasts on the outlook for the British economy.
The Chancellor is due to take to the dispatch box at 11.30am, more to follow…
Chancellor Jeremy Hunt is expected to announce new tax hikes and spending cuts
Key points:
– The Chancellor said his statement has three priorities: Stability, growth and public services
– OBR describes ‘global factors’ as the primary cause of inflation
– The Bank of England has the Chancellor’s ‘wholehearted support’, pledging not to change its remit
– OBR: Inflation to be 9.1% for 2022, 9.4% for 2023, falling sharply from the middle of the year
– OBR: We are already in recession. GDP growth of 4.2% in 2022, falling in 2023 by 1.4%, before rising 1.3% in 2024 and by 2.6% in 2025
– OBR: Government plans mean inflation reduced, recession shallower and unemployment lower in coming years
– OBR: Housing activity to slow
– New fiscal rules…
– Hunt: ‘Spending cuts would not be compatible with high quality public services’
– Just over half of £55bn raised from spending, while the half from tax
– ‘Those with more will contribute more’ but headline rates will not increase. Tax as a percentage of GDP will rise by 1 per cent over next three years
– Income tax: 45p threshold reduced to £125,140, those on £150,000 and more will pay £1,200 more in tax every year
– Dividend allowance cut from £2k to £1k
– Thresholds on income tax personal allowance, national insurance and inheritance tax maintained for further two years to April 2028
– Electric vehicles no longer be exempt from Vehicle Excise Duty from April 2025
– Tax relief for SMEs
– Windfall taxes: ‘Any such tax should be temporary and not deter investment, and recognise cyclical nature of business’
– Energy profits levy increased from 25% to 35%
– Oil and gas firms will see their tax rise from 65% to 75% of UK operations profits until March 2028 – extended from December 2025.
– 40% tax on profits of older renewable and nuclear electricity generation.
– This will raise £14bn in 2023 alone
– Temporary 45% levy on electricity generators
– Business rates: £14bn tax cuts over next five years
– ‘We are going to grow public spending but more slowly than growth in the economy’
– Overall spending in public services will continue to rise in real terms over next five years at rate of 1%
– DWP to initiate review into economic inactivity, unemployment
