Chancellor George Osborne will deliver the autumn statement, which replaces the usual pre budget report, on Tuesday 29th November. A new report from the Office for Budget Responsibility, including latest estimates for the country’s economic growth, is due to be published on the same day.
Many economists are expecting the Chancellor to take the statement as an opportunity to announce new ‘bold measures’ aimed at restoring growth. According to the Financial Times Osborne has indicated that the eurozone crisis has given him the “opportunity to make some difficult trade-offs in favour of growth that may have been considered too difficult in calmer times”.
The coalition’s new policy of credit easing is likely to top the bill, this is a process whereby the Government buys billions of pounds worth of corporate bonds, giving the market a boost in cash. These bonds are typically in large companies, however it is likely that an extension of the scheme to small and medium sized businesses will be announced next week.
Cuts to business tax are virtually certain to be announced in the statement. Writing in the Telegraph back in August Osborne stated that his plan involves “cutting business tax and doing away with very high tax rates which only damage growth and enterprise”. It remains to be seen whether or not the controversial 50p income tax rate will be scrapped.
According to the Guardian, Business Secretary Vince Cable has confirmed that his department have been working on a package for capital investment spending, which may or may not be ready in time for the autumn statement after being held back by apparent clashes over the specifics of the recovery plan.
Vince Cable also stated that: “The Government is not about to introduce large scale tax cuts or big increases in public spending, despite concerns that the economy is heading for another recession.” One slightly unwelcome possibility is that VAT will be increased to 22.5 per cent in order to help further the UK’s deficit, George Osborne, however, will be reluctant to implement such a policy as the previous increase from 17.5 to 20 per cent has been blamed for the lack of growth and out of control inflation..