Welcome to our rolling coverage of the Autumn Statement.
George Osborne has missed his fiscal targets and cut corporation tax.
We’ll bring you all the day’s developments live. By Tom Burgis and Ben Fenton.
15.45: We’re winding up the blog now, but you can follow events as they unfold through constantly updating stories on the front page of FT.com
15.31: A representation of the “flamethrower of uncertainty” can be found in the documentation of the OBR. It is also known as a “fan chart”. I doubt George Osborne is a fan of it, though.
15.24: Chote speaks of the “flamethrower of uncertainty”- a favourite phrase, unsettlingly enough, of the OBR, which is a chart showing forecasts in a wide range that makes the chart lines look like a firebreathing dragon.
15.18: Chote says that the variation in the possible range in the forecast of net debt figures for the UK is a large number, but is “dwarfed by the scale of uncertainties” on the issuance of debt. I think that’s the second time he has said that in his address.
15.12: The Spectator is running a rather scary chart showing the lost output of the current “seven-year slump” in the UK.
15.07: Robert Chote, director of the Office for Budget Responsibility, is live now, going through his department’s figures that underpinned the bad news Mr Osborne has just had to deliver.
15.05: Gavyn Davies has blogged for the FT with his view on the autumn statement while the FT’s Lucy Warwick-Ching has collated some very interesting instant reaction from personal finance experts.
14.49: Hannah Kuchler on the FT’s UK desk has been keeping an eye on business reaction to the autumn statement.
She says:
The CBI, the employer’s organisation, urged the government to stick to its guns on deficit reduction to retain international credibility, saying it was no surprise that austerity would last longer than expected.
John Cridland, director-general, welcomed investment in infrastructure and support for exports, but said the proof was in the delivery. He said:
“Businesses need to see the Chancellor’s words translated into building sites on the ground.”
But the British Chambers of Commerce was less positive, declaring the statement not good enough for a country meant to be in a state of “economic war”.
The government is just “tinkering around the edges”, John Longworth, the BCC’s director general said, adding: “The Budget next March must make truly radical and large-scale choices that support long-term growth and wealth creation. That means reconsidering the ‘sacred cows’ of the political class, including overseas aid and the gargantuan scale of the welfare state. Only a wholesale re-prioritisation of resources, to unlock private sector finance, investment and jobs, will be enough to win the ‘economic war’ we are facing. The danger is that our political class is sleepwalking with its eyes open.”
14.40: Lionel Barber, the FT’s editor, just passed by the live news desk so we asked him what he thought of the autumn statement.
The Chancellor is in a hole, but the good news is that he’s stopped digging. The FT supports the government’s fiscal stance, but is there more to be done on monetary policy to boost growth? That’s the question.
14.26 Who says the British don’t like doing things the French way? Might we surmise from this tweet from the BBC’s Robert Peston’s interview with Danny Alexander, Osborne’s Lib Dem No2, that the UK’s crediworthiness might be going to way of its Gallic cousins’?
Others are more chipper:
14.21 The business department has summarised what the Autumn Statement will mean for companies. The FT’s Hannah Kuchler has the details:
Business will get:
- £1.5bn to help small companies access growing markets overseas. For the first time UK Export Finance, the government export credit agency, will be able to issue loans to foreign customers and businesses wanting to buy goods from UK businesses
- £1bn confirmed for the business bank to “address the long-term structural gap in lending to small business”
- £600m more for science, research and innovation
- An extra £350m for the Regional Growth Fund
- £270 to improve Further Education colleges
- Extra £120m to invest in supply chains to encourage companies to invest in the UK
The department adds that the statement included the first stage of the government’s response to Lord Heseltine’s review, “No stone unturned”, but doesn’t say how much extra money this will mean. It also doesn’t mention that Osborne has cut corporation tax by a further 1 percentage point, bringing it down to 21 per cent by April 2014.
14.17 Should you wish to peruse those Autumn Statement documents in full from the comfort of FT.com, here they are.
And here is the full text of George Osborne’s speech.
14.04 David Miliband, former minister and brother of Labour leader Ed, has weighed in:
14.01 This just in from Mark Boleat, policy chairman at the City of London Corporation:
On the corporation tax cut:
“The direction of travel on corporation tax is welcome and sends a clear message that the UK is open for business. This will help to deliver jobs and growth needed across the country.”
On the increase in the banking levy:
“The banking sector has been working hard to improve balance sheets while mobilising capital and stands ready to pay its fair share to support the economic recovery. What the banks, like all businesses, require though is stability and predictably in the tax system so that they can confidently plan for the future. In this context, a fifth increase in the bank levy is unhelpful.”
13.56 The highlights (we’re building this into a comprehensive list of the key points from Osborne’s Autumn Statement).
- The economy is forecast to contract this year by 0.1 per cent down from a previous forecast of 0.8 per cent growth. Growth forecast also cut for the next five years
- Borrowing to rise between 2012-13 and 2016-17 by £51bn to £417bn, or 14 per cent more than previously forecast
- Office for Budget Responsibility predicts the chancellor will miss by one year his target to bring down the level of borrowing as a proportion of GDP by 2015-16. Says however he will meet the target to balance the cyclically-adjusted current budget over the coming five years
- Unemployment predicted to peak at 8.3 per cent down from earlier forecast of 8.7 per cent
- Corporation tax reduced by another percentage point to 21 per cent from April 2014
- Planned rise in fuel duty permanently scrapped
13.46 The Verdict, Part One.
Chris Giles, the FT’s economics editor, who predicted much of the Autumn Statement in this morning’s paper, has just briefed the paper’s top team on his view of the headlines.
He says we have seen a major redistribution of monies, squeezing the rich and the poor to give something back to the middle, but the overriding fact is that the numbers are terrible.
He says the poor have been hit “pretty damn hard” with the restriction of non-pensioner benefits to 1 per cent rises for the next three years, a saving of £3.7bn in 2016-17.
13.43 And so the dust begins to settle. This from James Knightley at ING:
The key question for markets is whether the weaker growth and fiscal outlook will heighten concerns regarding debt sustainability at the ratings agencies. If it does then a downgrade could be on the cards, threatening to undermine sterling and potentially putting upward pressure on government borrowing costs
With the IMF sounding less certain on the effectiveness of aggressive austerity and given the clear intention of the government to get the fiscal finances back on track, we suspect that the ratings agencies will give the Chancellor the benefit of the doubt too.
13.41 Ed Balls lands a blow by asking how it can be that poor people will be motivated to work by having their tax credits cut, while millionaires are to be motivated by having their taxes cut. There follows a riff about a certain Tory MP’s appearance on a certain jungle-based celebrity show. And with that, Ed Balls has sat down.
13.37 Ed Balls is whipping up the Labour benches but Michael White of the Guardian makes this point:
13.35 Ed Balls asks the Lib Dems whatever happened to the mansion tax. He knows, as do we all: David Cameron was having none of it.
13.33 Not much has changed in the markets during the chancellor’s statement, reports the FT’s Neil Dennis.
There were no shocks or market-moving surprises for investors to focus on and the FTSE 100 remains up 0.2 per cent at 5,880.3, while the FTSE 250 is up 0.4 per cent at 12,096.16.
The pound has slipped fractionally against the dollar, by 0.1 per cent to $1.6090, but remains 0.2 per cent higher against the euro at £0.8114. The 10-year gilt yield has slipped 0.1 basis points to 1.81 per cent.
13.31 Referring back to Osborne’s comments about the ruinous effects of the eurozone crisis and other overseas economic woes are having on the UK, Balls throws another barb: “It’s not the rest of the world’s fault, it’s his policies that have failed.”
Then Balls has the House falling about by claiming credit for the scrapping of the 3p rise in fuel duty.
13.29 And here, for Ed Balls and everybody else, are the Autumn Statement documents in full.
13.27 Ed Balls, combative as ever, says the level of debt will be higher at the end of this parliament than at the end of the last (Labour-led) one.
“He’s not wavering, Mr Speaker, he’s drowning,” Balls says of his opposite number, to much uproar.
13.25 After Osborne was forced to concede that key fiscal targets have slipped again, Ed Balls says: “The chancellor’s fiscal strategy has been completely derailed.” Balls promises to dig through the figures that were not in the speech…
13.24 Stuttery start from Balls. Now into his stride. “We can see the true scale of this government’s failure.”
13.21 Personal tax allowances rise to £9,440 from April 2013.
And that’s it. A 50-minute speech. Here comes Ed Balls…
13.19 As expected, Osborne confirms the creation of an alternative gas department to oversee developments in “fracking”. There will be a single office to regulate the production of shale gas.
13.18 3P RISE IN FUEL DUTY SCRAPPED ALTOGETHER — NOT JUST DELAYED
13.15 Tax: OSBORNE CUTS MAIN RATE OF CORPORATION TAX BY A FURTHER 1 PERCENTAGE POINT TO 21 PER CENT FROM APRIL 2014
There will be a 1% rise in the threshold at which top-rate tax has to be paid. Capital gains tax allowance rises by 1 per cent to over £11,000. The chancellor says the government is to put money into a regional growth pot that councils can bid for, along the lines of Michael Hestletine’s recommendations. Business tax relief scheme to be extended by two years to 2014. Council tax freeze to continue next year.
13.14 That welfare move was not quite what had been expected. It was tougher. From the FT’s Jim Pickard.
13.11 Benefits: The rise in welfare payments will be limited to 1 per cent across the board. This is below inflation and in line with average rises in private sector pay, Osborne says. The chancellor says he expects that to save £3.6bn over next three years.
13.09 More from Jim Pickard in Westminster:
The first big surprise of the Autumn Statement is that national pay bargaining for teachers will be scrapped and replaced by freedom for schools to pay teachers by their performance. Teacher performance is of course very difficult to measure, and unions will fight this hard.
13.06 With Nick Clegg sitting just over his shoulder, Osborne swats away one of the Lib Dem leader’s favourite initiatives. There will be no “mansion tax” on palatial properties. It’s not all good news for the wealthy, though. From 2014-15, the lifetime allowance for pension contributions before tax kicks in will be reduced from £1.5m to £1.25m (check). Maximum tax-free annual pension contributions fall from £50,000 to £40,000 — but not to £30,000 as some had expected.
New single-tier pension to be introduced and ISA levels raised. A 2.5 per cent rise in basic state pension to £110.15 per week.
13.02 Tax dodging. Tax evasion prosecutions up 80%, with £7bn more collected in tax. Osborne says he is introducing an anti-avoidance rule next year and expects £5bn from undisclosed Swiss accounts over the next five years. HMRC budget will be spared the cuts to other departments in a boost for tax collection and more tax inspectors will be hired.
There will be more resources devoted to ensuring multinationals pay tax — it will also be made a priority of the UK’s time chairing the G8 next year. No word yet on a rumoured Starbucks deal…
13.00 The FT’s Sarah O’Connor, economics correspondent, has filed our first lead story since Osborne started speaking: Osborne slashes growth forecasts. Watch this space as the story evolves.
12.59 Gilts steady so far, sterling too.
12.58 Infrastructure: Loan of £1bn confirmed for extension of Northern Line to Nine Elms as part of development of Battersea. As expected.
12.55 Swinging the axe in Whitehall: government departmental budgets to be reduced by 1 per cent next year and 2 per cent the year after. Osborne says civil service pay arrangements will not be changed. Whitehall efficiency savings have achieved a £12bn in saving. Education and Communities and Local Government singled out as best performing departments for meeting budget cuts. But the government will to stick with 0.7 per cent of GDP target for international aid spending.
12.53 Osborne’s still in full flow but Chris Giles, the FT’s economics editor, makes a critical point:
12.52 Borrowing cut for this year to £108bn but rises for the next four years including coupons from the Bank of England’s quantitative easing programme.
12.47 Rules, rules… Osborne reveals he is on track for his target to eliminate the structural deficit but off track in his goal of getting debt falling as a share of GDP.
That is to say, the Office for Budget Responsibility says Britain is “on course”, i.e. has a better than 50 per cent chance of meeting, its target of by 2015 paying down cyclically-adjusted deficit. But the target of bring down public debt as a proportion of output will be delayed by a year.
12.46 From Westminster, the FT’s Jim Pickard has an instant take:
This may sound churlish but the obr’s prediction that gdp growth will rise in each of the next four years (from 1.2 percent next year to 2.8 percent in 2017) seems on the rosy side of possibilities.
12.44 OBR predicts that youth unemployment will peak at 8.3%.
12.40 BAD NEWS FOR OSBORNE Economic forecasts from the Office of Budget Responsibility — the independent forecasting body — predict the economy will contract by 0.1 per cent in 2012-13, from original forecasts of growth of 0.8 per cent. Many predictions had suggested a revision to a flatline. Instead, growth has fallen marginally into the red.
The OBR also reduces growth forecasts across the current range of forecasts running until 2018. Growth forecasts for next 5 years are cut. Next year growth will be 1.2 per cent, down from 2 per cent previously predicted, rising to 2 per cent in 2014-15. In 2015-16 growth will be 2.3 per cent followed by 2.7 per cent and 2.8 per cent in 2017-18.
12.39 The chancellor also says that today’s figures will show a saving of £33bn in reduced government borrowing costs from projects made two years ago.
12.37 Osborne: “Today’s figures will show that the deficit is forecast to continue to fall.” Savings will come from cuts to bureaucracy, benefits and the well-off, as expected.
Chancellor admits he will roll forward spending cuts and tax rises into 2017-18.
12.35 And we’re off. Osborne: there are no quick fixes to the world’s woes: fiscal cliffs, eurozone crises and so on. But there is progress to report…
And after barely a minute, the Speaker is demanding some decorum in a raucous Commons.
Britain is on the right track, Osborne insists.
12.34: Osborne now on his feet and ready to go as a very sombre mood descends on MPs, who have just listened to the pain of Ann Clwyd MP, in tears, talking about the death of her husband, cold and frightened, unnursed, in an NHS hospital. Cameron very sympathetic.
12.30: Another question about corporate tax avoidance, focused on Amazon. Cameron says there is common ground that multinationals should pay “proper amount of tax”. He says transfer payments are “strange practices” which the government knows there is more it can do, so does the HMRC.
12.26 The scene in the noisy House of Commons just now (the MP in the row behind Cameron is listening to a speaker, not falling asleep):
David Cameron at PMQs (Photo: PA)
12.25: With the chancellor about to get to his feet in the Commons, Michael Hunter of the FT’s markets desk has the pre-statement readout from the markets:
London’s FTSE 100 is 0.2 per cent higher at 5,878.91, a rise of 10 points. The FTSE 250, seen as more representative of the domestic UK economy is 0.4 per cent firmer at 12,097.10, a gain of 44 points. Sterling is flat at $1.6107. The yield on 10-year benchmark government debt stands just 1 basis point lower at 1.81 per cent.
12.23: Margaret Hodge MP, chair of the public accounts committee which grilled Starbucks, Amazon and Google on their tax avoidance, says the coffee giant’s deal with the taxman to be announced shortly shows “naming and shaming works”. Cameron agrees (mostly).
12.21: The important matters now: Cameron asked to confirm that the Duke and Duchess of Cambridge’s baby, if a girl, will be able to become queen like her “much-loved great grandmother”. He does so.
12.19: Political correspondents on Twitter seem to agree Cameron is performing sparkily today. As Tom Bradby of ITN notes…”which is surprising given that the autumn statement is expected to contain only bad news”.
12.16: Moving on to non-economy questions now…
12.15: The purpose of these two questions was apparently so that Miliband could tell the House that the government had reversed its election promise to “cut the deficit, not the NHS” and is cutting the NHS and not the deficit. Cameron says his opponent is “100% wrong”.
12.13: Miliband asks why Cameron has failed to keep his promise to balance the UK’s books by 2014-15. The prime minister sticks to the previous question about the top rate. He says the Chancellor will answer that one.
12.11: Powder being kept dry on both sides of the Commons chamber on the big economic questions until after Mr Osborne has addressed MPs. Labour keeps up attack that the government has broken its 2010 election promise to increase spending on the health service. Cameron says Labour wants to cut the NHS “it will never be safe with them again”, turning an old Labour attack on the Tories on its head. Raucous stuff, but more of an hors d’oeuvre. Now moving onto the question of what to do with the top rate of tax.
12.07: First question from Ed Miliband is about the NHS and whether or not the government has cut spending there. PM quotes Office of National Stats on spending, and is immediately accused by the Leader of the Opposition of “the most slippery answer you can possibly imagine”.
12.05: Meanwhile, good and bad news for Mr Osborne, according to two of the UK’s most followed business-tweeters. The BBC’s business editor Robert Peston (@peston) says that he has been told that the UK’s AAA rating is doomed, no matter what the Chancellor does today; Mark Kleinman, his counterpart at Sky News, says Starbucks has struck a deal with the taxman and will pay corporate taxes on income of between £5m and £10m this year.
12.02 Cameron is on his feet for PMQs…
11.53: If the Chancellor, as expected, goes down a “tax the rich (pension fund)” route, here is an earlier FT explainer on what it would mean for the UK P&L.
11.50 Welcome to the Usain Bolt economy. One of the key lines from this morning’s lobby briefing on the Autumn Statement is that the government is “equipping Britain to succeed in the global race”, reports the FT’s Helen Warrell.
This follows a theme started by David Cameron in his speech to the Conservative party conference in October – that the UK is under increasing pressure from newer, emerging economies and will have to shape up if it is to compete internationally. The prime minister’s exact words back in Birmingham were:
“Because the truth is, we’re in a global race today. And that means an hour of reckoning for countries like ours. Sink or swim. Do or decline.”
Singling out China, India, Brazil, Indonesia and Nigeria as countries that were “on the rise” Cameron said this group were all “lean, fit, obsessed with enterprise, spending money on the future – on education, incredible infrastructure and technology”.
Given the chancellor’s announcement yesterday of a £5bn package for new schools, roads and science projects, it is clear that Downing St is keen to learn from the example set by these relative newbies. The only element missing – a boost for silicone roundabout and tech city, widely tipped for later this morning.
11.28 George Osborne has left No 11, thus:
Osborne sets off from 11 Downing St (Photo: Getty)
Should he pass through College Green, he will spot these people, who do not appear to rank among his biggest fans:
Unison protesters in George Osborne on the morning of the Autumn Statement by parliament (Photo: PA)
11.19: Kiran Stacey back on the line, this time to report what a busy morning David Cameron has had. In 40 minutes, he has Prime Minister’s Questions, but before that, he has been meeting both with his Cabinet and, somewhat less predictably, with Carey Mulligan.
The cabinet met for the second time in two days this morning, as the chancellor took them through what will be in his statement this afternoon for an hour.
Downing Street would not comment on whether there were any more nasty surprises in store for ministers, who were told at Tuesday’s cabinet that many of them had to find extra spending cuts from their budgets to fund more capital spending.
But the PM’s official spokesman did say this: “The chancellor’s central message was that Britain is on the right track. We are dealing with our deficit and our debts in a fair way that means everyone will make a contribution. We are equipping Britain to succeed in the global race.”
The message is a reflection of what we have been reporting for weeks: that money will be taken from the top and the bottom of society. From the top, in the form of pension tax credits, and from the bottom in the form of a squeezer on benefits.
There was no word on which meeting the prime minister enjoyed most – the cabinet discussing the autumn statement or his subsequent meeting at Number 10 discussing dementia with Carey Mulligan, the Hollywood star who has led a campaign on the issue.
11.00: The FT’s Kiran Stacey reports from Westminster:
The Treasury has not commented on these whispers, which has only served to amplify them. But if the chancellor does choose this route, it will cost him over £1bn, a hefty rise from the £300m a 3-month freeze would cost.
10.50: The FT’s Claire Jones, part of our hive of economics correspondents, says latest PMI figures show why Mr Osborne may not be wearing his broadest smile today:
An influential gauge of activity in the UK’s dominant services sector fell to its lowest level in almost two years in November, amplifying fears that the economy could shrink in the final quarter of 2012.
Activity fell to 50.2, its lowest level since December 2010, according to the CIPS/ Markit survey of purchasing managers working in the industry. A figure above 50 signals an expansion in activity.
The poor performance of the services sector, which makes up more than three quarters of GDP, will be of concern to the government ahead of this afternoon’s Autumn Statement.
She quotes Vicky Redwood of the consultancy Capital Economics:
“The outlook for growth next year is clearly looking shaky and the OBR will be revising down its economic forecasts fairly significantly alongside the Autumn Statement this afternoon,” Vicky Redwood of Capital Economics, a consultancy, said.
Ms Redwood said the data suggested that the recovery in the biggest part of the UK economy had “completely fizzled out”.
Chris Williamson, chief economist at Markit, said the survey added “to worrying signs that the economy faces a renewed slide back into contraction”.
The poll indicated that activity in the services sector could weaken further in the months ahead, reporting that a tough economic climate had undermined efforts to secure new orders.
The weak services PMI comes on the back of renewed signs that activity in the construction sector is contracting. However, the manufacturing PMI for November, released earlier this week, showed signs of a stabilisation in activity.
10.38 Stephanie Flanders, the BBC’s economics editor, takes an unflattering view of what has happened since the chancellor took power. In her blog post setting the scene for the Autumn Statement, she says that the Office of Budget Responsibility will say today that the UK has “nothing to show for £59bn of austerity measures”.
10.13 Time for a flick through today’s papers. The FT’s Hannah Kuchler concludes that, while everyone predicts a glum day for George Osborne and the British economy, there is probably enough support in the papers’ editorials to stop the chancellor sobbing into his cereal this morning.
The Times declares the chancellor “right” to remain committed to austerity and says delaying his fiscal targets — which Osborne is expected to do today — is the “most sensible” option.
“Though he will be derided for failing to achieve so prominent a part of his economic strategy, he can argue that spending restraint in the medium term is having an effect, and that the economy is being hampered by unanticipated external developments (principally the continuing eurozone debt crisis).”
But Daniel Finkelstein, writing in The Times, says Osborne needs to convince the public that the gains from his deficit-reduction plan are worth having. In an extended golf metaphor, he argues:
“He needs to make people feel that not to have them would be like making a bogey, that it would be a loss. He needs to make a smaller deficit feel like a proper advantage, worth the pain it caused.”
The Daily Mail praises Osborne for being “a beacon of realism in a sea of greens”, as the chancellor is expected to approve up to 30 gas-fired power stations in the statement.
The Daily Telegraph is a little more equivocal, calling on the chancellor to stop tinkering with austerity and warning him not to attempt magic tricks to meet the goal of a balanced budget.
“The chancellor must be much more open and honest about the scale of the challenge facing the public finances, and set out a clearer set of objectives and sanctions for ensuring that is adequately faced up to.”
The editorial concludes by pushing Osborne to be even tougher and “commit to a more robust and urgent plan for putting the public finances back on a sustainable footing”.
Writing in the Telegraph, Mary Riddell has some solace for the chancellor saying Labour hasn’t yet made a convincing case for its economic policies.
“Although Mr Balls has prepared a detailed response, after consulting with Labour’s arch-strategist, Lord Mandelson, the contents can be summarised in four words: ‘I told you so.’ … Without issuing a pre-emptive spending review, Labour must soon be much more precise about what it would cut. Without compiling a manifesto, it will need to flesh out what big-spending areas, such as health and welfare, would look like in Ed Miliband’s Britain.”
Among the red-tops, The Daily Mirror is on predictably aggressive form, writing ahead of an expected squeeze on benefits:
“In the Britain of today a callous Government is making life harder while blaming the poor for their poverty.”
10.11 Via Robin Wigglesworth of the FT’s capital markets team, here from Capital Economics is a pretty thorough Autumn Statement checklist.
10.03 The coterie of estate agents trading in London’s luxury housing market is getting increasingly twitchy ahead of today’s statement, reports Ed Hammond, the FT’s property guru.
The 2 percentage point increase in stamp duty for houses worth over £2m made in the Budget has already put the wobbles on the market. Moreover, the vortex of uncertainty created by the George Osborne’s rhetorical war on “morally repugnant” tax dodgers has spooked foreign buyers, the lifeblood of luxury London.
Deal-starved agents are praying Osborne doesn’t hit rich homeowners again and risk wrecking the party all together.
Charles McDowell, an estate agent specialising in high-end homes in Chelsea and Kensington, said Wednesday’s statement had “make or break implications”, adding: “A large number of my clients are waiting with baited breath.”
09.57 Fears of a new tax raid on banks were raised by a front-page headline in The Times newspaper today. But as the FT’s Jim Pickard notes:
09.45 We hardly expected David Cameron to declare that the Autumn Statement will be an unmitigated disaster, so a message of support for his chancellor is entirely predictable, and here it is:
The latest polling from YouGov is less encouraging for the Tories, however.
09.35 From the FT’s lobby team, Jim Pickard has been taking early soundings.
Meanwhile, some Tory MPs are hoping Osborne will rule out any fuel duty rise before 2015.
09.31 Sterling is flat against the dollar this morning as currency traders await the Autumn Statement.
09.25 We’ll have a round-up of the papers’ predictions for you shortly. In the meantime, the big story of the morning is confirmation that the Age of Austerity has grown longer. From the FT’s splash today:
George Osborne will be forced to extend austerity deep into the next parliament, as he presents a bleak Autumn Statement against the backdrop of weaker growth and a larger deficit.
The chancellor’s hopes of completing his austerity drive before the 2015 election lie in tatters as he prepares to tell MPs on Wednesday that cuts will probably be needed for another year, running through to 2018.
09.17 Good morning. Dawn over Westminster and it’s a big day for the chancellor — again. Should you have missed it, economics editor Chris Giles’s post on the FT’s Money Supply blog skewers the central questions in the Autumn Statement and adds a warning:
This year there is the added complication that the Treasury is in an arrogant mood, so you cannot take statements by the chancellor or officials at face value. This happens periodically; it is a massive bore, but it requires everyone to be on their guard.
For a version of Chris’s analysis in layman’s terms, see this crystal clear FT explainer.
On the political front, the FT’s Jim Pickard has written a handy 10-point primer on what to expect from George Osborne’s mini-Budget: fiscal targets, energy policy, squeezing the rich, hunting tax dodgers, what to do about Michael Heseltine, the lot.
Talking politics, Janan Ganesh’s column is essential reading in gauging how the Autumn Statement will play with the Great British Public.
The average swing voter’s attitude to austerity appears one of grudging acceptance. They do not like it and positively abhor its authors but they regard it as more or less unavoidable, like sour-tasting medication. Crucially, they believe that any government would be doing it regardless of its political stripe. The economic debates that grip the elites – stimulus versus consolidation, the wisdom or otherwise of cutting early – do not rage among a fatalistic electorate, whose grievances with the government have more to do with its moral heart than its economic head.
All the same, Labour is ready to pounce:
Following the furore over seemingly minuscule tax payments by multinationals in the UK such as Google and Starbucks, one of the day’s hottest potatoes will be tax avoidance. As the FT’s Philip Stephens wrote in his column on Monday:
Times are tough in Britain. This week George Osborne, the chancellor, is set to announce that he has failed to meet his targets to cut government debt and that the country can continue to expect slow growth, spending cuts and tax increases for as far as the eye can see. This is not the obvious moment for multinational companies that claim to be good corporate citizens to be manipulating their earnings and sending their profits offshore.
Elsewhere, the BBC’s James Landale warns that Osborne risks gaining a reputation as the “mañana chancellor” and suggests that the political decisions of the day boil down to whether you like Hilaire Belloc or prefer Mötley Crüe…
Jim Pickard
Kiran Stacey