In the very recent Autumn Statement by delivered by Chancellor Jeremy Hunt, the government has outlined 110 growth measures for the UK economy. Black & White Bridging reacts to the news:
Commercial Director Damien Druce responded:
“I’m no economist, but I think the chancellor had a golden opportunity to keep this Autumn Statement, ahead of the Spring Budget and General Election, simple in two steps. Both could be viewed as growth and inflationary curbing measures:
Businesses – rather than ‘full expensing’, reversing corporation tax back to 19% from the recently introduced rate of 25% would have been a good ‘pro-choice’ move. This would have increased confidence in those businesses holding back on expansion plans from bigger premises to an increase in headcount. To improve the prospects of millions of small businesses and their employees is an opportunity missed.
VAT – rarely a fan of Labour Governments and the associated monetary policy, Chancellor Hunt could have taken us back to 2009 and reduced the standard rate of VAT to 15%. This further pro-choice move would have enabled low-income households to tackle the cost of living without addressing income tax bands and fuelling wage inflation. Unfortunately, in my opinion, it is another opportunity missed.
The news about Permitted Development to subdivide any house into flats is a nice surprise which we didn’t see coming, and this will surely increase the amount of affordable homes for those who need it as long as standards are maintained.
Increasing the living wage and state pension is understandable, and direct help for our low earners and the most vulnerable in society is to be welcomed. It does feel like this Government is mobilizing for an election, this might give them a much-needed boost in the polls, but a lot can happen before then such as inflation becoming sticky, so let’s watch this space because from what I heard today, that is nothing short of gimmicks.”
Director of Lending Oli Bland remarked:
“With Net Debt to GDP currently sitting at circa 92% up from just 84% in 2021-2022 and projected to peak at 94% in 2026 the idea that there is any headroom for the chancellor is a fallacy.
High taxes and regulatory pressure are the biggest drags on UK growth, however with borrowing as high as it is and no major decreases in sight, the prospect of the major tax cuts which are necessary to increase consumption and investment within the economy are not possible without money markets severely penalizing sterling.
Spending cuts to reduce the deficit which are then followed by tax cuts sequentially are the only real ways to drive growth to an extent which it outstrips inflation however those are politically unpalatable. The reality is that our current Debt to GDP level is almost at the level Greece was at in 2007/2008, a country whose economy has widely been regarded as a basket case.
We need a smaller state and lower taxes to stimulate growth and that really is as simple as it is, however, the gimmicks announced by the chancellor in this autumn statement will have minimal effect. They will also fail to achieve a significant change in the voting intentions of the general public.
If things do not change, we are in a position where borrowing is the highest it has been since the 60s with the highest interest rates in nearly two decades, as such we are burdened by debt as a nation and that really is the root cause of all the fiscal and monetary problems we face. Time for a government to have an honest conversation about that rather than mislead the “man in the street” with false hope.”
Lastly, Director of Intermediaries Adam Tyler added:
This was an important message following last year’s mini-budget and the 14 interest rate rises since 2021, which seems to have got inflation under control, although it still remains double the Bank of England target. However, as we enter 2024, we need as much confidence boosting across our Industry as possible and even considering that next year will be an election year, this statement contains a number of really positive moves that will help all businesses including our Property Developers and Investors. Both of these will also benefit from the proposed changes to planning rules that will help house-building requirements.
What did you think of the Autumn Statement and how does it affect you and your business? Let us know in the comments.