Chancellor Philip Hammond will deliver the Autumn Statement on Wednesday.
- What do we know so far?
Pre-empting the Autumn Statement is an exercise in playing detective, in clue-gathering and piecing together a narrative.
Any prediction is bound to be incomplete – but here are some thoughts at least on what I believe the broad brushstrokes will be and why.
- The context
All indicators are that (because of Brexit) growth is going to slow down over the next few years.In my conversations with the Chancellor he’s been clear that he believes tough times lie ahead, which means that unless Mr Hammond is willing to rack up much more debt (highly unlikely given his reputation as a fiscal hawk and that he’s referred to the debt we already have as “eye watering”), he’s going to be severely constrained when it comes to what he can spend.
Remember too that he’s locked in to a series of Tory manifesto commitments that further curtail his ability to spend.
Just because the Chancellor has jettisoned Osborne’s fiscal surplus target – doesn’t mean he is going on a spending spree.
It is important also to consider is that because the economy has not as yet taken a significant hit – retail sales have been resilient, inflation hasn’t yet filtered through to the high street – Mr Hammond is not under huge pressure to put in place measures to get people spending right now.
My sense is that Mr Hammond does not feel a need to commit to a significant stimulus right now. But he is aware that come next year, he may well have to do more.
The Chancellor is however under some pressure already to get businesses investing – we’ve seen a slowdown in business investment (given the uncertainty) yet many companies are sitting on significant cash reserves.
So whilst we are unlikely to see a cut in VAT tomorrow, we may see measures aimed encouraging businesses to deploy their cash reserves and invest.