Business looks for growth plans in Autumn Statement

CHANCELLOR George Osborne will today shift billions of pounds into capital spending in an Autumn Statement that will mix investment with cuts, new energy plans and measures targeting tax evasion.

Mr Osborne’s Autumn Statement is also likely to include an admission that the Coalition cannot meet its target to be cutting debt as a share of GDP in 2015.

He will deliver the statement against the backdrop of the latest figures from the Office for Budget Responsibility which are likely to downgrade previous forecasts of 0.8% growth this year and 2% in 2013.

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A centrepiece of the statement is likely to be the Chancellor’s decision to move £5bn from the day-to-day Whitehall current account into capital spending as the Coalition tries to stimulate growth.

Earlier this week, the Ernst & Young ITEM Club set out the case for a £14bn investment in shovel-ready infrastructure projects.

Carl Astorri, senior economic adviser to the Ernst & Young ITEM Club, said: “The Chancellor’s decision to release £5bn to build schools ticks all the right boxes. It doesn’t require extensive logistical work or planning, so it’s likely to be successful in encouraging growth in the short-term. And since capital spending is excluded from the measure of borrowing covered by the fiscal mandate, it will not have any impact on the main fiscal rule.

“But the Chancellor has the scope to go even further than this. Not only were we in favour of increasing capital spending by £7bn for both this fiscal year and next; contrary to the Chancellor’s decision we think that this can be authorised in the absence of tightening elsewhere.”

Plans for new gas-fired power stations, tougher rules on pensions tax relief and measures to address concerns raised in recent weeks about the amount of tax paid by companies such as Amazon and Starbucks are also expected.

The Chancellor could also take the opportunity to signal whether the Government will embrace ideas set out by Lord Heseltine that would see more spending devolved from Whitehall to the regions with Local Enterprise Partnerships given a greater role in regional economic development.