Although the obr seems to have assumed that much of this was cyclical, the Chancellor has still had to pencil in another year of austerity in 2017/18 in order to meet his main mandate to balance the cyclically adjusted current budget within five years. 13.43 ever wondered what Osborne's speech would look like if you stripped out all the words, threw them onto your computer screen and added some fancy colours? Well look no further: Osborne's speech in a wordle (Source: Worditout) This year's buzzword is "tax". With so much pressure on companies to start paying more of it, Osborne mentioned the word 49 times in this year's Autumn Statement. It was mentioned just 24 times in last year's speech. Another popular word was "work". A total of 20 mentions this time around, compared with 18 at the last Autumn Statement. "Help" only gets 11 mentions this time.
Autumn, statement 2016
This is an increase; in fact, it is the first senior cash increase in the higher rate threshold in this Parliament. But it is not an increase in line with inflation, and so it raises one billion pounds of revenue by 2015-16. 13.51 tuc general Secretary Brendan Barber said: When you are self-harming you should stop, not look for better sticking plasters. With the economy still scraping along the bottom, unemployment set to rise and the Chancellor missing his own debt target, we need a fundamental change in direction, not more muddling through. Cuts, austerity and squeezed living standards stretch seemingly without end into the future. What is missing today is any vision of a future economy that writer can deliver decent jobs and living standards its pain without purpose. 13.45 Vicky redwood at Capital Economics offers her first take on the autumn Statement: The key message from the autumn Statement is that the Chancellor is sticking to his fiscal consolidation plans, with the period of austerity actually being stretched from seven to eight years. Most of the measures were as expected with a rise in capital spending and the cancellation of Januarys fuel duty rise paid for by an extra squeeze on departmental spending, a cut in pension tax relief and a real terms cut in benefits. But Mr Osborne pulled an extra 1pc cut in corporation tax and an extra 235 rise in the personal tax allowance out of the bag. The obrs gdp growth projections were a bit worse than expected, with the forecast cut in every year.
14.04 Labour mp dennis skinner launches an attack on Osborne's track record. He says: This posh boy never changes. Instead of being a bullingdon boy who wrecks hotel rooms, now as Chancellor of Exchequer he wrecks the economy. Osborne responds: Im not sure that personal attack warrants essay a reply. 13.53 george Osborne said during his statement that the level at which the 40pc tax rate kicks-in will be raised, but that it will rise slower than inflation. Essentially, this will raise a further 1bn in revenue from middle class workers: The higher rate threshold will be increased by 1pc in the tax years 2014-16. So the income at which people start paying the 40pc rate will go up from 41,450 to 41,865 and then to 42,285. I want to be completely clear with people.
Output is undershooting and government borrowing overshooting even the march Budgets modest expectations. Growth forecasts have been downgraded, the austerity programme extended to 2018 and the debt rule rolled on a year. After no growth this year, the obr has reduced its short-term forecasts and, worse, does not expect output lost assignment now to be made up further out. This output pessimism risks becoming self fulfilling as the corollary is even more growth-dampening austerity measures. In fact, the problem rather is deficient demand. Over-indebted consumers are saving rather than spending, apprehensive businesses are sitting on cash rather than investing and recession-bound overseas markets are limiting exports. On top of this private sector retrenchment, public sector cutbacks are further depressing margaret growth.
14.16 The autumn Statement did announce a rise in the 40pc tax rate threshold - but it will climb slower than inflation, and therefore slowly affect more and more people. The Chancellor estimates that it will drag an extra 400,000 middle class workers into a higher tax bracket by 2015/2016: Higher rate taxpayers are also affected by the governments changes to the personal allowance and in 2012-13 a typical higher rate taxpayer is better off. As a result of this Autumn Statement alone, a typical higher rate taxpayer currently receiving a personal allowance will be 47 better off in real terms in 2013-14, and in total no worse off by 2014-15. Compared to uprating the higher rate threshold by inflation, these changes are expected to create around 400,000 more higher rate taxpayers by 2015-16. However, taking into account the income tax changes announced since 2010, these new higher rate taxpayers will typically be over 270 better off in real terms over the parliament. 14.13 Ed Conway sums up the autumn Statement in 140 characters:.08 Time for a breather. If you're not ready for one yet, here's the Chancellor's Autumn Statement in full - all 93 pages. We've also uploaded the Chancellor's speech, and reaction to the statement. 14.06 More reaction from Andrew Smith, chief economist at kpmg: The governments strategy is to combine deficit reduction with economic recovery, but at the moment we are not getting much of either.
The, autumn, statement, bond
An admission of broken promises would never have been tolerated by gordon Brown. Like osborne, he broke his rules in 2005 but being master of them he simply changed the definition. For eight years, Browns golden rule was founded on the assumption that the economic cycle was seven years long. When it was clear he would break it, it went up to nine years, then 10, and finally. At least Osborne has had the courage to own. 14.42 Here's the 2012 Autumn Statement in full:.25 so, will the words uttered by Osborne today sway the minds of those rating agency analysts? David Kern, chief economist at the British Chambers of Commerce, isn't sure: The new fiscal forecasts are disappointing but not surprising, so it would be premature to assume that the uk will lose its aaa rating.
The Chancellor's commitment to tackle the deficit remains resolute. His decision to cut welfare spending further and reduce the number of civil servants will reinforce market confidence. At the same time, there is a welcome focus in the autumn Statement on policies that will improve the productive potential of the economy through investment incentives and reduced corporation tax. While write howard Archer at ihs global Insight says that there is a "very real danger" of the uk losing its aaa crown: There has to be a very real danger that at least one of the credit rating agencies will strip the uk of its. While this would likely be seen as the an embarrassment for the government given the emphasis it has placed in the past on keeping the uks aaa rating (although it appears to have downplayed this recently as the risks to the aaa rating has mounted!). There are so few countries left now with a aaa rating, that to lose it would not be the stigma or threat to market confidence that it would have been say a couple of years ago.
More work will have to be done on this front. In this sense the Chancellor is again only putting off the evil day. George Osborne leaves the Treasury ahead of the autumn Budget statement in the house of Commons (Photo: afp/Getty). 14.45 Philip Aldrick, the telegraph's economics editor, writes that Osborne's belt-and-braces approach to finance "has left him with his trousers down" : so much for the Chancellors belt-and-braces approach to his credibility over the public finances. Hes let out his belt another notch adding an extra 5bn of austerity in 2017/18 and popped off his braces, with the admission that hell miss his target of having debt falling as a proportion of gdp by 2015/16.
If george Osborne's fiscal credibility were trousers, theyd be round his ankles now. And the ratings agencies will surely punish him for letting things slip. In his own words, the debt target was meant to place our fiscal credibility beyond doubt. Now theres a whole year of doubt as the target wont be met until 2016/17. To be fair, though, the fact that hes broken his golden rules just 30 months after establishing them demonstrates the strength of the institutional framework he has put in place. The Office for Budget Responsibility has kitemarked its claims to independence with its unsympathetic view on the economic outlook.
Our thoughts on the, autumn, statement
15.01 Robert Chote, the head of the obr, is holding a press conference on the revised uk growth forecasts. He says they reflect "new judgments, new data, and the evolving policy package." Here's a reminder of the forecasts, then and now:.47 While associate editor Jeremy warner argues that today's Autumn Statement is not yet radical enough : First impressions of george Osborne's Autumn. Admittedly the Chancellor has had to concede he won't meet his fiscal rule of reducing debt as a proportion of gdp by the end of this parliament, but this was always going to be of more significance politically than economically. It's a climbdown, yes, but would it really have made any sense to apply the additional 17bn a year fiscal squeeze the Chancellor said would be necessary to meet it? Presumably, this was not what the shadow Chancellor Ed Balls was proposing when he cited this breach as evidence of failure in the government's economic policy. There were some very welcome measure to stimulate business a further 1percentage point reduction in the headline rate of corporation tax and a ten-fold increase in investment allowances to 250,000 a year but I doubt they are radical enough to make a significant difference. The further squeeze on benefits raises a meaningful quantity of money.7bn a year according to the Chancellor's numbers but it is still not the game changing reduction in entitlement friend spending necessary to get the public finances back onto a sustainable footing.
Chote says that the government's qe boost will not have a significant impact on the government's chances of meeting its mandate. Chote adds that Osborne now has a 70pc chance of meeting the government's mandate in essay 2017/18 (Osborne's fiscal mandate is to eliminate the structural deficit in five years time). 15.09 The economy is running 3pc below its full capacity this year, says Chote. He adds that the obr has a rosier view of the British economy than the imf or oecd, but a bleaker view than some forecasters, including Oxford Economics. 15.07 And here's the obr fiscal outlook in full. 15.05 Chote says that the revisions mirror those made by the bank of England, and other forecasts since the spring. The "recovery still lacks momentum he adds.
that drive economic growth have been weaker, including consumer spending. However, external factors such as higher food and energy prices have also played their part. It's a "mixture of internal and external factors he adds. "you can't really divvy.".19 Chote (pictured above) repeats that borrowing this year will come in at around 108bn, compared with 120bn forecast in March. He says that this is mainly due to lower spending by local and central government - which will save 4bn, a boost from qe profits, and revenue from the 4g auction, which will bring.5bn. This will offset weaker than expected tax receipts. This means that Britain's deficit will narrow.9pc of gdp this year, from a predicted.6pc in March.
Bbc, where he has described the shadow chancellor as being "all over the place" in the commons today: Ed Balls today was frankly all over the place. He was criticising the government for not doing enough and not borrowing more and at the same time denouncing extra borrowing I mean the economics of that are just utterly obscure to most people. 15.35, sky's, ed Conway asks how painful this downturn will. Is it the worst since the war? Chote refuses to play ball, "I'll leave the wartime comparisons to Mr Haldane he says ( friend he's referring to this but adds "what is striking is the weakness of the recovery over an extended period of time". Chote adds: it's taking a longer time to resolve itself than you would normally expect. Clearly in historic terms it looks quite challenging. 15.25 Andrew Clark at the times asks, chote how much of, britain's pain is due to domestic factors, and how much is due to factors outside our shores.
The, autumn, statement : What you need to know
17.35, european stock markets have closed. Ftse 100 closed.4pc at 5,892.08, while uk benchmark borrowing costs fell slightly. The yield on uk 10-year gilts edged down.3 basis points.774pc. 17.19, the budget was a first hit with tweeps around the world, according to analysis by sap social Media. Research for the telegraph suggests that although, mr Osborne got off to a shaky start, by the time he finished delivering the autumn Statement, 67pc of the sentiment on Twitter was positive. 17.06, here's a clip of deputy. Nick Clegg shaking his head as, osborne announces that there will be no mansion tax:.51, business Secretary, vince cable has been talking to the.