Autumn Statement: Northern Powerhouse and infrastructure spending among Chancellor’s key messages
CHANCELLOR George Osborne used the Autumn Statement to reiterate his central message that a rebalanced UK economy will thrive through a commitment to business support, and investment in science and infrastructure.
He drew attention to the UK economy’s 3% growth this year, ahead of many other leading economies, but repeated an earlier warning from David Cameron that “the warning lights are flashing” with recession in Japan and stagnation in the eurozone.
However, he gave the notion of a “Northern Powerhouse” a boost with the announcement of a £250m Sir Henry Royce Institute for Advanced Materials Science in Manchester with branches in Leeds, Liverpool and Sheffield.
The Chancellor referred to the recent devolution deal with Manchester and did not suggest any other deals were in the pipeline but said, “the door is open to other cities”.
Mr Osborne danced through the national debt and deficit figures, which were better than expected, partly due to a new accounting treatment.
He said the growth forecast for this year was now 3%, up from 2.7% in March and 2.4% last year. Growth is forecast to be 2.4% next year, 2.2% in 2016, 2.4% in 2017, and 2.3% in 2018 and 2019. Inflation is forecast to be 1.5% this year, 1.2% next year and 1.7% the year after.
Borrowing is expected to be £91.3bn this year, down from £97.5bn forecast. Then it will be £75bn, then £40.9bn, then £14.5bn, then a surplus of £4bn in 2018-19. In 2019-20 there will be a surplus of
£23bn, said the Chancellor.
National debt will be 80.4% of GDP this year, said Mr Osborne. It will peak at 81.1% next year, then go down to 80.7% in 2016, then 78.%, then 76.2%, and 72.8% in 2019.
He said: “Today against a difficult global backdrop I can report higher growth, lower unemployment, low inflation and a deficit that is half what we inherited.
“Now Britain faces a choice, do we squander the economic security we have gained and go back to the disastrous decisions on spending and welfare that got us into this mess, or do we finish the job.”
Key points:
* Clampdown on tax arrangements of multi-national tech companies
* Restriction on the way banks offset losses against profits.
* £45m to support businesses to trade with emerging economies as a counterweight to European stagnation.
* Expand Funding for Lending for a year.
* Expand British Business Bank.
* Boost for children’s TV with new credit alongside existing animation credit
* Increasing R&D tax credit for SMEs to 230% and credit for larger firms to 11%.
* Double the small business rate relief for another year which should benefit half a million firms
* A full review of the structure of business rates.
* The basic rate income tax allowance will rise to £10,600 next year, not £10,500 as originally planned.
* Abolition of Air Passenger Duty for under 12s from May, and for under 16s in 2016.
* Stamp duty to be reformed. The “single-slab” rate will go, and instead it will be levied at a more gradual rate. This will mean nothing on the first £125,000, 2% on the share above that up to
£250,000; then 5% on the next slice up to £925,000; then 10% on the next slice up to £1.5m; then 12% on everything above that.
