The Budget and the Autumn Statement may not always make sense to everyone, we have taken the initiative and tried to explain all the points from the recent Autumn Statement.
THE ECONOMY
KEY POINTS
- GDP growth forecast for 2013 more than doubled to 1.4%
- Deficit expected to halve between 2010 and 2014/15
- Debt to start falling a year earlier than planned, in 2016/17
- Unemployment continues to fall
“THE PLAN IS WORKING”
Chancellor George Osborne opened this year’s Autumn Statement with the words, “Britain’s economic plan is working.” The figures speak for themselves but, “we need to secure the economy for the long term,” he added, before making it clear that deviating from the ‘plan’ presents the greatest risk to that security.
The key figures for the deficit, debt and unemployment all show progress but remain stubbornly high.
POSITIVE GROWTH ‘SURPRISE’
What a difference nine months makes. In March 2013 the Office for Budget Responsibility (OBR) forecast GDP to grow by 0.6% in 2013. That figure has now more than doubled to 1.4% – the largest improvement to current year economic forecasts at any Budget or Autumn Statement for 14 years. That growth is expected to continue to 2.4% in 2014, revised up from a previous forecast of 1.8%.
The revised figures have been described as a “positive growth surprise” by the OBR, which claims it has been cyclical, “reducing the amount of spare capacity in the economy, rather than indicating stronger underlying growth potential.”
THE DEFICIT IS DOWN
Since 2010, when it stood at 11%, the deficit has fallen to 6.8%, a further reduction from the 7.5% forecast at the Budget in March. By 2014/15 the deficit is expected to have halved to 5.6% before continuing to reduce until 2018/19 when the OBR actually expects Britain to run a small surplus.
DEBT REMAINS HIGH
While the deficit lingers it adds to our debt, which remains high. At 75.5% of GDP it is £18 billion lower than forecast in March. Debt is expected to peak at 80 per cent in 2015/16 before finally starting to fall from 2016/17.
UNEMPLOYMENT CONTINUES TO FALL
“We now have the lowest proportion of workless households for 17 years,” the Chancellor revealed, as the Government expects the total number of jobs to rise by 400,000 this year. In the same vein, unemployment continues to fall. It stands at 7.6% this year and is expected to fall to 7% in 2015 – the level at which Governor of the Bank of England Mark Carney has said he will consider increasing interest rates.
WHAT DOES THIS MEAN FOR YOU?
While the figures are undoubtedly positive, underlying growth still needs strengthening and there is still some way to go. As an individual or business owner we can help you to ensure your finances remain on track and reflect the economic environment we are operating in.
Please contact us to find out how we can help your business grow and develop. Download the 2013 Autumn Statement
