The Chancellor revealed yesterday his plans for the economy over the next twelve months and beyond, but the reaction of many groups and the media seems rather underwhelming.
After the conviction shown by the Prime Minister in recent speeches, including his party conference treatise on how we would win the war on the economy, it seems as though George Osborne may have been unable to deliver any radical ideas on how to improve growth while still reining in spending. It very much feels like a case of trying to please all of the people all of the time and actually pleasing no-one.
However, I'm sure if you are reading this and live locally, you will be pleased with the decision to abandon the January fuel duty rise for the time being. The rural economy is reliant on fuel and we know a fuel price increase is passed on in the price of literally everything. I think many of us will be pleased Osborne has averted this particular New Year hangover.
Although the Government has not met its targets to reduce borrowing, the deficit has been reduced by a quarter in the last two years, which feels at least like the economy is now under control. Although growth predictions are meagre, there have been measures to boost the economy with investment in infrastructure projects.
Income tax thresholds have been raised, which means people keep more of the money they earn, but decreases in welfare benefits have been controversial. Having said that, if the agenda is to reduce the welfare bill (which is unsustainable) how else is this to be done?
One area we will certainly be keeping our eye on is the long-term effect that the changes to tax rules on pensions will have for our clients. The Government seems determined to erode the tax relief available for pensions and we do not know if this will be reduced even further in future. On the other hand, some good news for investors is the rise in ISA allowances.
The City seems have reacted reasonably well so far, but given the fact Osborne has played it fairly safe, that is hardly surprising. With so many groups to try and keep on side; the voters, the markets, the ratings agencies and not least of all, the factions within the coalition, I'm not surprised we have seen no radical plans to jump-start the economy. Having said that, as we all know in our industry, risk and reward go hand-in-hand and now is hardly the time to be taking risks with the future of the UK economy.
If any of the issues raised in the Autumn Statement today leave you unsure about your financial plan, please come and see us for a chat - initial consultations are at our expense. Our clients know we are always at the end of the phone!