Autumn Statement 2016

The Chancellor gave his annual Autumn Statement on 23 November 2016.


Announcement highlights

  • Government borrowing reduced by nearly two-thirds (2010 – present), 

  • Government has set new fiscal targets which aim for 2% underlying deficit and debt falling by 2020 to ensure there is flexibility for investment in areas like roads. 

  • Fuel duty to remain frozen for seventh year, saving car drivers on average £130 and van drivers £300 annually.

  • Commitment to cutting corporation tax to 17% by 2020, making the UK the lowest in the G20.

  • Raise the Personal Allowance to £12,500 and the Higher Rate Threshold to £50,000 by 2020-21.

  • Rural rate relief will increase from 50 to 100% in April 2017, saving a business up to £2900 a year.

  • The National Living Wage for those aged 25 and over will increase from £7.20 per hour to £7.50 per hour.

  • £2.3 billion for a new Housing Infrastructure Fund, to be used on areas such as roads.

  • £390 million investment in future transport technology, including driverless cars, renewable fuels and energy efficient transport.

  • Insurance Premium Tax will increase by 2% from 1 June 2017.

  • More money for Scotland, Wales and Northern Ireland.

 

Tax

  • Removing the tax benefits of disguised earnings for self-employed and employers

  • Shutting down inappropriate use of the VAT flat rate scheme put in place to help SMEs

  • Abolishing the tax advantages linked to Employee Shareholder Status

  • Government will be consulting on reducing the differences between the treatment of cash earnings and benefits.


UK Economy 

The UK is forecast to be the fastest growing country in the G7 in 2016 and economic activity grew 2.3% in the year to Q3 2016. The employment rate is at a record high of 74.5%, and between 2009-10 and 2015-16 the deficit was reduced by almost two-thirds from 10.1% to 4.0% of GDP. 

The UK is likely to face a period of uncertainty, followed by adjustment. Reflecting this, the OBR forecasts that: 

  • GDP growth will slow to 1.4% in 2017, and then recover to 1.7% in 2018, 2.1% in both 2019 and 2020, and 2.0% in 2021. 

  • The OBR expects lower business investment and household spending to weigh on GDP in the near term. 

  • Lower business investment is expected to exacerbate the long-standing weakness in UK productivity. 

  • The OBR highlights that there is a higher than usual degree of uncertainty in these forecasts.


RMI Autumn Statement documents:

Full detailed Autumn Statement summary.

NFDA Autumn Statement submission.

PRA letter to Chancellor. 

 

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