Chancellor Osborne’s Autumn Statement
This morning George Osborne, The UK Chancellor, presented his Autumn statement and emphasised that the “economic plan is working, but the job is not done”, which sounds like a sound bite from one of Bill Clintons US Presidential election campaigns, and I suggest today that this will be the focus of the Conservative party message for the next General Election in 2015.
The chancellor though highlighted the impressive improvements in growth, over the last six months in the UK economy focussing on improving unemployment and low inflation giving strong forecasts which suggest these recent improvements will continue. Please note that the below is a summary, the full PDF report will follow tomorrow.
- From 2015 capital gains tax on home purchases/sales from non-residence will be introduced, which could replace stamp duty and more details will follow;
- The Bank Levy will increase to 0.156%, raising an additional £2.7bn next year and £2.9bn a year for 2015-16;
- There will be further tax breaks for shale gas, with the tax rate being halved on early profits;
- Up to £1000 tax allowance will be transferable between married couples;
- UK Based Exchange Traded Funds will be exempt from Stamp Duty ;
- The government will introduce a new tax relief for equity and certain debt investments in social enterprises with effect from April 2014;
- Following a consultation over the summer, investments that are conditionally linked in any way to a VCT share buy-back, or that have been made within 6 months of a disposal of shares in the same VCT, will not qualify for new tax relief. This change will take effect from April 2014.
- The Office of Budget Responsibility (OBR) now project growth this year will be 1.4%, which is a significant change from an expected 0.6% in March.
- Next year’s forecast has also been revised upwards to 2.4% from 1.8%, with the following four years growth expected to be 2.2%, 2.6% 2.7% and 2.7%.
- The OBR have shed light on the risks to growth, claiming the Eurozone will shrink 0.4% this year.
- Unemployment is expected to fall to 7% in 2015 and 5.6% by 2018, with an expected 400k additional job.
- Underlying public sector net borrowing down to 6.8% down from 7.5% dropping to 5.6% next year, and predicts a small budget surplus by 2018;
- The Borrowing forecast is down by £73bn in the next few years, with an estimated £111bn being borrowed this year and £96bn next year;
- The chancellor has introduced a cap on welfare spending, however this excludes pensions;
- There will be an updated charter of budget responsibility to be presented to the parliament next year;
- Pensions will rise by £2.95 a week from next April, and the state pension age will rise to 68 in the mid-2030s, up to 69 in the mid-2040s;
- It is also worth noting that we are now going to spending less per head on government spend that since records began so Government Spend as a percentage of GDP has never been so small;
- Rate relief scheme for small business will be extended for another year;
- There will be a cap increase on business rates at 2% from next year;