Richard Larner: What can we expect from the Autumn Statement?
PUBLISHED: 17:23 21 November 2016 | UPDATED: 17:23 21 November 2016
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Philip Hammond, the new Chancellor of the Exchequer, will deliver his first Autumn Statement to Parliament on November 23.
While the Autumn Statement is viewed as being less significant than the Budget, which is normally released in the spring, we can expect the chancellor to announce some significant initiatives that will affect both businesses and individuals, as well as commentary on the likely path of future UK economic policy.
By abandoning George Osborne’s pledge to balance the books and achieve a budget surplus by 2019-2020, the new chancellor has greater flexibility to respond more appropriately to stimulate the economy amidst the process of Britain’s withdrawal from the European Union.
During a recent visit to China, he spoke about potentially using the Autumn Statement to “reset” Britain’s economic policy and adopt a more flexible fiscal framework. Greater clarity on the government’s policy plans will therefore be welcomed, which should remove some of the uncertainty that has built up in recent months and led to signs of lower levels of business confidence and delays in key investment projects.
The effectiveness of the monetary policy pursued by the Bank of England since the global financial crisis, through low interest rates and quantitative easing, has been called into question.
While it has raised the value of financial assets, principally through a recovery in the stock market, as well as providing support for consumer spending, it has done little to stimulate real economic growth.
The statement is therefore likely to focus principally on plans for an increase in infrastructure investment through the National Infrastructure Delivery Plan, including some initiatives to support further the housebuilding sector and provide funding for Britain’s road and rail networks. This should help to create new jobs and re-invigorate business activity.
Within the area of personal finance, we have already seen the chancellor scrap George Osborne’s plans to create a secondary pension annuity market, due to concerns about the complexity of such a scheme and the potential issues of adequately protecting consumers.
In terms of possible areas for individuals on which the chancellor is likely to focus, commentators are expecting to see further changes to the mechanics of the Individual Savings Account (ISA), and some simplification to the various types of ISA would be welcomed.
It would also be helpful to have greater clarity about the government’s future plans for pensions and, in particular, the Lifetime Allowance, which currently limits how much a person can save before triggering a tax liability – something which is likely to affect an increasing number of individuals over the coming years.
Richard Larner is the Norwich office manager at investment managers Hargreave Hale.