UK Autumn Statement 2016: Hammond is to announce UK budget

On the 23rd of November, Philip Hammond will announce UK Autumn Statement 2016 before parliament. Will the focus shift from the austerity years to the government spending? 

22 November, AtoZForex The Chancellor of the Exchequer Philip Hammond will report Autumn Statement before parliament this Wednesday. It will be the first budget, following the Brexit referendum. Analysts anticipate a slight shift from austerity years since the country is preparing for exiting the EU.

Theresa May’s plans to help ordinary households 

Some economists say that the surprising victory of Trump can force administration of Theresa May to take actions that would aid workers avoided by government policies. Howard Archer, IHS Markit economist, has commented that the UK’s Prime Minister clearly stated her wish to help households “struggling to get by and who feel left behind by the economy’s recovery since the 2008/9 slump”. He added that both Brexit vote and Trump’s election have stressed the need for governments to seize income inequality.

Furthermore, Theresa May reported that the government would invest in research and development and that Philip Hammond would increase spendings by £2 billion a year until 2020. The investment will be made via a fund that will include robotics, medical technology, and industrial biotechnology.

What can UK Autumn Statement 2016 include?

Although the UK’s economy proved to be resilient, experts think that Britain’s exit can still cause economic turmoil. This can restrict the amount of planned austerity cut in Philip Hammond‘s budget speech. According to Fiona Cincotta, City Index analyst:

“We can expect the Autumn Statement to be a glimpse of what we can expect once the divorce proceedings with the European Union begin next year.”

Also, she stated that they anticipate the focus to move from austerity measures to government’s spending. Whilst, Kit Juckes Societe Generale analysts said that “public finances are not in good shape and Mr. Hammond has no appetite for a major increase in borrowing”.

The Treasury signaled loosening of Britain’s fiscal straightjacket that was aimed at spending reduction and tax rises. According to the Treasury’s statement:

“He will set out how the government will fire up the nation’s economic infrastructure – all part of plans which form the backbone of ongoing work to close the UK’s productivity gap.”

The Autumn Statement is viewed as a mini-budget before the main tax-and-spend reports are provided in March.

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