Autumn Statement November 2011
Published on 29 November, 2011 - 18:48
Chancellor George Osborne has today reported some grim economic news with gloomy predictions for the UK economy.
He announced growth would stutter to under 1% over the next 2 years, much lower than previously predicted and the risk remains of the UK again sliding into a double dip recession with the chancellor warning if the rest of Europe went into recession “it may prove hard to avoid one here”
Amongst today’s 140 strong reforms package there are some positives, including a plan to invest £30bn in infrastructure, which will release a private sector investment of £20bn to “make the UK’s infrastructure fit for the 21st century”
Public sector pay rises are to be capped at 1% for the next 2 years, saving more than £1bn by 2014/15; with the number of job losses in the public sector rising to 710,000 by 2017, practically twice that previously predicted.
Plans to raise the state pension age to 67 (from 66) are to be brought forward to 2026, eight years earlier than intended, which will save a massive £56bn.
Businesses have been hoping for measures to stimulate growth and fill order books and there are a number of schemes aimed at improving the UK’s weakening economy.
The National Loan Guarantee Scheme (NLGS) aimed at small businesses will release £20bn and will provide much needed affordable lending to small businesses.
For those UK businesses exporting there is a provision of £45 million, doubling to 50,000 the number of SMEs supported, and generating similar support to 500 mid-sized businesses.
Small businesses will be able to take advantage of the existing rate relief holiday for a further 6 months until April 2012 the Chancellor announced. Meaning that small businesses won’t be billed for the whole of 2011 & 2012 while larger firms are allowed to defer 60% of their bills for 2 years.
The economic landscape is clearly very different from that of 23 March 2011 and Mr Osborne said: “Much of Europe now appears to be heading into a recession caused by a chronic lack of confidence in the ability of countries to deal with their debts.”
“We will do whatever it takes to protect Britain from this debt storm while doing all we can to build the foundations of future growth.”
Growth forecasts based on calculations from the independent Office for Budget responsibility (OBR) for the next few years have been revised down with figures for 2011 previously predicted at 1.7% now estimated at 0.9%, 0.7% in 2012 and 2.1% in 2014; borrowing will increase dramatically with the forecast revised up for 2011/1212 from £122bn to £127bn.
Further announcements include, the planned 3 pence increase on fuel duty beeing deferred until August 2012.
There is an additional £250m package to support energy intensive firms, along with an increase to the Regional Growth Fund by £1 billion to provide on-going support to the private sector in areas currently reliant on the public sector.