By Dr Peter Eckersley, research associate at Newcastle University
The Chancellor of the Exchequer’s biannual statements are usually a good opportunity for the Government to set out its future economic and fiscal strategy. The 2016 Autumn Statement, however, told us very little and left a lot of people distinctly underwhelmed.
The measures announced were piecemeal and far from surprising; many had been trailed prior to the event or were simply a reiteration of the previous chancellor’s policies. For example, the reaction to the pledge to cut corporation tax to 17% was a little overblown; this measure was common knowledge months before Philip Hammond took to his lectern last week.
No definitive industrial strategy was mapped out, the timeframe for overhauling Britain’s deficit was shifted forwards (again), and economic growth forecasts were announced with the proviso that the goalposts are likely to move again depending on the impact of Brexit.
In fairness to the Office for Budget Responsibility (OBR), predicting the UK’s future economic performance is an almost impossible task given the continued uncertainty following the referendum vote to leave the EU. To achieve sustainable growth, the country needs an overarching industrial strategy but this is difficult to articulate without a proper plan for exiting the EU. Currently there is no such plan in place and this is what the Government must address.
Perhaps inevitably, then, the chancellor’s Autumn Statement was a bit of a damp squib. There were some highlights: plans to invest in Britain’s broadband and 5G infrastructure are to be welcomed and the £23bn National Productivity Investment Fund should go some way to addressing the country’s productivity gap. Meanwhile, the increase in the income tax threshold to £12,500 will see workers have more money in their back pocket at the end of the month and this may trigger an upturn in consumer spending. For the North East, the promise of much-needed upgrades to the A66 and A69 will significantly improve the local transport infrastructure, while the region will get a share of the £556m earmarked for local enterprise partnerships in the North of England.
However, the bigger strategic picture remains blurred. Ministers must define, articulate and then implement a Brexit plan as soon as possible. Britain’s future economic strategy – and prosperity – depends on it.
published on: 30 November 2016