Autumn Statement reaction
Wednesday 23 November 2016
Our experts react to the Autumn statement, announced today by Chancellor Philip Hammond
Professor Ghulam Sorwar, finance expert , at the University of Salford Business School, said: “Given the expected Brexit black hole of £122 billion, the Chancellor is taking a very cautious line with give-aways. A small true increase in minimum wage and fuel duty frozen. However, the main benefit cuts planned by George Osborne are still on.
“In terms of economic outlook it is very weak, with forecast for next year reduced by OBR to 1.4%. The budget surplus date of 2020 no longer holds. Most likely it will be 2025 or beyond.
“The Chancellor is taking a very cautious approach in anticipation of the uncertainties in the next few years. It is as though the Chancellor is preparing us for the worst. Expect a more radical budget in the spring of 2017.”
Professor Karl Dayson, Associate Dean and expert in banking and finance, said: “With the news that an additional £30b of debt has been added to the balance books, the first bill has just come in from Brexit.
“The government has decided to place an emphasis on countering the economic impact of Brexit by redoubling their efforts to support digital technology companies, and while this £400m investment is welcome news for the wider UK economy, it will do little to deliver industrial jobs to the north of England.
“The north needs to ensure that it is in a position to benefit from this investment and that the money does not just go to London and the south east where the overwhelming majority of these jobs are based.”
Dr Andreas Tsopanakis, Lecturer in Finance and expert in economics and risk, at the University of Salford Business School, said: “Phillip Hammond has a difficult puzzle to solve with this year’s Autumn Statement; a puzzle including both economic and political challenges. On the one hand, British government has to deal with the growing worries and concerns over the growth prospects of UK economy, which look gloomy, based on the projections recently published by EU Commission and IMF. Growth rate is expected to remain anaemic, with inflation in the uprising and relatively weak public finances. These economic conditions will surely reflect on welfare and prosperity of average British, posing extra challenges to the government. The expected changes in the governmental policies, regarding minimum wage, welfare policies, stamp duty, funding in applied research are effort to ameliorate the potential consequences of future economic hardships.
“The political challenge lies on the Brexit effects in the economy, the potential perils of a “hard exit” strategy, as seems to be the case based on the EU attitudes towards the negotiations with UK. As it is still not clear how Teresa May will proceed with these negotiations and how the outcome of this negotiation will reflect on country’s economic shape, the government is trying to be pro-active and reassuring for society economic security. Unfortunately, it is not entirely in her hands.”
Dr Gordon Fletcher, expert in digital business, said: "The proposed additional £23 billion for the new National Productivity Investment Fund (NPIF) hints that the government is showing positive signs of support for the digital economy and more importantly for emphasising the importance of genuine innovation in the sector. Supporting the development of a stronger digital economy the Digital Infrastructure Investment Fund also brings – after many years of campaigning by rural and regional community groups - £400 million over the next 5 years to the developing of a robust national broadband infrastructure. Some further recognition that good Internet access can be equated with essential services like water and electricity.
"However, the statement also hints that the NPIF could merely become the “Brexit Buffer” against the financial uncertainties that departure from the EU will bring. Although £23 billion can go a long way many of the projects listed for the NPIF point back to the traditional transport and housing infrastructure including main road and rail links that will consume much of the budget. These are important and necessary products in their own right but bringing together under the same fund the building of affordable housing with advanced R&D support offers a lot of wiggle room over five years for a rebalancing of priorities in either direction."
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Sam Wood
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