Chancellor George Osborne will deliver his Autumn Statement on 5th December 2012. The Office for Budget Responsibility will also publish its latest report on the UK’s economic and fiscal outlook on the same day.
The Autumn Statement gives the Chancellor the opportunity to outline his plans for the economy based on the Office for Budget Responsibility’s figures.
So what is likely to be contained in the Autumn Statement?
- There have been calls for the Chancellor to abandon his ’golden rule’ on cutting debt. This rule is designed to ensure that debt is falling as a % of GDP by 2015 – 16. Critics say that the fiscal situation is so poor that the Chancellor may consider a small stimulus
Small business bank
- Plans were recently announced to create a Government backed small business and more details may be released
- The planned increase in duty on petrol may be implemented after being delayed twice already although there is a strong lobby to delay this even further
- A rumour that refuses to go away is the scrapping of higher rate tax relief on pension contributions
- The Lib Dems have made it clear that they want the 40% higher rate tax relief on pensions scrapped but it will be a brave move by the chancellor to scrap it – the loss to the government on all relief on pension contributions is around £40bn a year
- A more likely scenario is a cut to the annual allowance for tax relief on pension contributions, the current level of £50,000 could be reduced to £40,000
- We could see a change to the ‘carry forward’ rules where unused relief can be carried forward for 3 years, this period could be reduced
- We are unlikely to see changes to the tax thresholds as these are normally dealt with in the April budget
- Whilst the calls for a ‘wealth tax’ have all but disappeared we could see council tax increased by adjustments being made to the bandings
- The link between inflation and upgrades in benefits is likely to be broken with benefits increasing at a slower rate
- More details may be forthcoming regarding Universal Credit, this is to be introduced in 2013 and is aimed at simplifying the system for people looking for work or those on low incomes
- There will also be a general drive to reduce the cost of benefits with some announcements on this matter probably being made
- Although there have been strong calls for more to be done to help the ailing housing market it is unlikely that new initiatives will be announced. We are likely to get some details on the performance of previously announced schemes, such as the government guarantee scheme to support housing investment which appears slow in developing
Note: These predictions will be updated regularly right up to the 5th December. The latest updates are shown in bold italics