The Chancellor says the government wants to ensure the UK economy is “match-fit” for the transition that will follow the Brexit vote. “So we will maintain our commitment to fiscal discipline”, he says, “while recognising the need for investment to drive productivity”
Philip Hammond says the Office for Budget Responsibility forecasts economic growth of:
- 1% in 2016 – down from 2% it forecast before the EU referendum
- 4% in 2017 – down from 2.2%
- 7% in 2018 – down from 2.1%
- 1% in 2019 – down from 2.1%
- 0% in 2020 – down from 2.1%
“While the OBR is clear that it cannot predict the deal the UK will strike with the EU, its current view is that the referendum decision means that potential growth over the forecast period is 2.4% lower than would otherwise have been the case,” the Chancellor says.
Philip Hammond says the deficit – as measured by public sector net borrowing as a percentage of GDP – will fall from 4% last year to 3.5% this year. It is forecast to continue to fall over the next five years, reaching 0.7% in 2021-22.
“This will be the lowest deficit as a share of GDP in two decades,” he tells MPs.
Philip Hammond accepts that debt will rise until 2018/19, when it is expected to fall for the first time since 2002 – and it will continue to fall thereafter.
Innovation and infrastructure gets £23bn
The Chancellor says the UK needs to become more productive, so that wages can rise and people can enjoy higher living standards. To help with that, he announces a National Productivity Investment Fund of £23bn to be spent on innovation and infrastructure over the next five years.
Philip Hammond pledges more than £1bn for broadband and 5G – a move trailed earlier this week. “My ambition is for the UK to be a world leader in 5G. That means a full-fibre network; a step-change in speed, security and reliability,” he says.
The government will also offer business rates relief on new fibre infrastructure from April, Mr Hammond adds.
Funding for 40,000 new homes
The Chancellor confirms funding for 40,000 new homes and announces a large-scale pilot to give the right to buy to housing association tenants.
“We will focus government infrastructure investment to unlock land for housing with a new £2.3bn Housing Infrastructure Fund to deliver infrastructure for up to 100,000 new homes in areas of high demand.
“And, to provide affordable housing that supports a wide range of need, we will invest a further £1.4bn to deliver 40,000 additional affordable homes. And I will also relax restrictions on government grant to allow providers to deliver a wider range of housing types,” Mr Hammond says.
“I can also announce a large-scale regional pilot of Right to Buy for Housing Association tenants – and continued support for homeownership through the Help to Buy: Equity Loan scheme and the Help to Buy ISA.”
- First tax rise – Insurance premium tax to increase from 17% to 20% from June 2017.
- Small businesses in rural areas a tax break worth up to £2,900 per year by increasing the Rural Rate Relief.
- Pensions – where someone is already in drawdown the annual allowance will be reduced from £10,000 per annum to £4,000 per annum.
- Philip Hammond confirms the government will still raise the personal allowance to £12,500, and the threshold for the higher tax rate to £50,000, by the end of this Parliament.
- The National Living Wage will increase from £7.20 to £7.50 in April next year.
- Cancel fuel duty rise – average saving of £130 per year, per driver.
Letting Agents in England to be banned from imposing upfront fees on tenants.
Autumn statement to be abolished.
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