Autumn Statement – UK Economy

According to the Chancellor, George Osborne, the UK is the fastest growing economy in the G7.

  • 3% growth forecast in 2014, up from 2.7% predicted in March. 2.4% growth forecast in 2015, followed by 2.2%, 2.4%, 2.3% and 2.3% in the following four years.
  • 500,000 new jobs created this year, of which 85% are new jobs on a full-time basis.
  • Unemployment set to fall to 5.4% in 2015.
  • Inflation predicted to be 1.5% in 2014, falling to 1.2% in 2015.
  • Welfare spending to be £1bn lower than forecast in March. The Office for Budget Responsibility (OBR) said the government’s overall plan was to reduce public spending from £5,650 per head in 2009-10 to £3,880 in 2019-20, implying a cut in real-terms for departments other than health and schools of 57% between 2009/10 and 2019/20.
  • £2bn extra every year until 2020 for the NHS.
  • Two year freeze in working-age benefits (first announced in October).
  • Migrants to lose unemployment benefits if they have “no prospect” of work after six weeks.

Public Borrowing / Deficit

  • According to the Chancellor, George Osborne, the deficit has been ‘cut in half’ since 2010.
  • Borrowing is set to fall from £97.5bn in 2013-14 to £91.3bn in 2014-15, (higher than the £87bn forecast in March 2014 and at 5% of GDP, this is higher than either France or Italy). The deficit is projected to fall to £75.9bn in 2015-6, £40.9bn in 2016-7, £14.5bn in 2017-8 before reaching a £4bn surplus in 2018-9 and £23bn surplus in 2019-20.
  • Debt as a share of GDP to rise from 80.4% this year to 81.1% next year before falling every year, reaching 72.8% in 2019-20.
  • World War One debt to be repaid.
  • Tax receipts up to 2017-18 to be £21bn lower than forecast, mostly as a result of lower than expected income tax receipts.

This commentary is our understanding of the Autumn Statement on 3 December 2014. It is for general information only and does not constitute advice. If you would like advice, please do not hesitate to get in touch with us on 01392 875500 or

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