In the midst of a cost-of-living crisis, Chancellor Jeremy Hunt’s 2023 Autumn Statement aimed to draw a line under the sombre tone of his previous fiscal statements
Armed with a fiscal windfall of £27 billion, the Chancellor unveiled a series of measures aimed at reducing the tax burden for households and businesses.
This blog article delves into the intricacies of the Autumn Statement, deciphering its impact on businesses and individuals alike.
OBR’s economic forecast
While the Chancellor championed 110 measures to stimulate the British economy, the accompanying report from the Office for Budget Responsibility (OBR) saw downgraded growth forecasts for 2024 and 2025.
Despite the economy’s resilience to the pandemic, inflation and interest rates surpassed earlier predictions. The OBR anticipates a 0.6% growth this year, revising its previous estimate of a 0.2% contraction.
Inflation rates, although easing to 4.6%, still pose challenges to living standards, forecasted to be 3.5% lower in 2024/25 than pre-pandemic levels.
Unpacking Personal Changes
Central to the Autumn Statement was the Government’s ‘back to work plan’, a multifaceted strategy promising support for workers with health conditions, increased minimum wage, and stricter benefit rules to encourage workforce re-entry.
The National Living Wage (NLW) is set to rise, benefitting over 2.7 million low-paid workers. However, concerns have been raised regarding the impact on businesses, as company insolvencies surged by 18% in October 2023.
The delicate balance between raising the NLW to ‘end low pay’ and the potential strain on businesses, especially SMEs, is worth keeping an eye on.
Business impact: Fostering growth and investment
The Autumn Statement outlined a visionary plan to bolster British businesses, aiming to unlock £20bn in additional business investments for each year of the next decade.
Key announcements include making the full expensing scheme permanent, a £4.3bn business rates support package, and pension reforms to release £75bn for high-growth companies by 2030.
Some of the money from the pension reforms will flow overseas or to secondary investments, but this additional finance could also address the current mismatch between the supply and demand for equity finance by smaller firms in the UK, thereby raising business investment.
Making the full expensing scheme permanent marks a watershed moment in British economic history, ushering in what Chancellor Hunt deems “the largest business tax cut in modern British history”.
Recognising the pivotal role of various sectors, the Chancellor unveiled several sector-specific initiatives.
Notable investments include £4.5bn in advanced manufacturing, substantial funding for AI and digital technologies, increased support for life science businesses, and enhanced incentives for the creative industries. These measures aim to fuel innovation, foster growth, and align with the UK’s commitment to achieving net-zero emissions.
In particular, the investment in advanced manufacturing businesses signifies a strategic move to fortify key sectors such as automotive, aerospace, life sciences, and green industries.
As the UK charts its course through economic uncertainties, understanding the implications of the 2023 Autumn Statement is paramount.
The warm reassurance of stability and transparency ensures businesses and individuals alike can navigate the evolving economic landscape with confidence.
Chancellor Hunt’s fiscal strategies, while addressing immediate concerns, aim to lay the groundwork for a resilient and thriving economic future.
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