Autumn Statement 2022: Our expert analysis
Chancellor Jeremy Hunt delivered The UK Autumn Statement to parliament on Thursday 17 November.
Autumn Statement 2022: Our Chief Economist’s view
InsightsThe Chancellors Budget and Forecast StatementsAutumn Statement 2022: Our expert analysis
Autumn Statement 2022: Our Chief Economist’s view
The government has announced the largest tax increases and spending cuts in nearly a decade. In this, austerity-focused, statement it has deliberately prioritised alleviating market pressures and putting the brakes on debt over lightening the burden on consumers.
In reality, the Chancellor was left with little choice in the matter. Attempting to expand fiscal spending for a second time could result in severe market distress, and, ultimately, much higher burdens in the immediate future.
Increasing the net minimum wage is a way to ease the shock on lower income consumers, without burdening the state coffers. However, this is no free lunch! The price will have to be paid by companies, many of which have already been experiencing lower margins. Meanwhile, the central bank could see the measure as inflationary and further hike rates.
In all, this is an emergency statement for emergency times. Inflation is running rampant, growth is stalling and a third of developed markets could experience a recession next year. Meanwhile, the distress in the bond market is increasing. The UK government chose to carefully navigate very choppy economic waters instead of, once again, spooking the markets.
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