The chancellor Philip Hammond has delivered his first major set-piece on the economy and public finances. Growth forecasts for 2017 and 2018 were revised down by the the independent Office for Budget Responsibility, while government borrowing was revised up.
Six economists give their take on the autumn statement.
Ian Stewart, chief economist at Deloitte:
This statement makes clear that the big theme of economic policy under Hammond will be improving productivity. He wants to send a powerful signal that the UK is open for business and that the government has a plan to grow the economy through this parliament.
Suren Thiru, head of economics at the British Chambers of Commerce:
Unsurprisingly, the OBR’s revised forecasts paint a more pessimistic picture of the UK economy. Despite this, in our view the OBR is slightly too optimistic about the UK’s near-term prospects. We think that the outlook for business investment is likely to be materially weaker than the OBR is currently predicting, with higher inflation and continued uncertainty over Brexit likely to stifle business growth intentions over the next year.
Yael Selfin, head of macroeconomics at KPMG in the UK:
The chancellor proved a bigger spender in his first autumn statement and focused on one of the fundamental challenges facing the UK economy beyond Brexit – productivity. It is a pity that there was not more focus on education. If the government intends to make the UK less reliant on non-UK workers post Brexit, the readiness of the local labour force will need to improve.
Ian Brinkley, acting chief economist at the CIPD, the trade body representing human resources professionals:
The economic forecasts from the independent Office for Budget Responsibility show that low growth and weak productivity will persist until at least 2018. The forecasts also show that real wage growth over the next two years will be close to zero. Even this may prove optimistic, as continued uncertainty, difficult market conditions, and higher unemployment are likely to constrain firms ability or need to pay more.
Lee Hopley, chief economist at EEF, the manufacturing trade body:
Including plant and machinery in the calculation of business rates represents a tax on productive investment that is out of step with international practice. The chancellor’s lack of action on this issue represents another missed opportunity to support long-term capital investment and improve the attractiveness of the UK as a competitive location for manufacturing at a time when both are desperately needed.
Martin Ellis, economist at Halifax:
The measures announced by the chancellor to boost housebuilding will support reducing the country’s housing shortage, alleviating the upward pressure on house prices and helping to make homes more affordable. The Halifax house price index has shown that annual house price growth has nearly halved from a peak of 10.0% in March this year, but remains robust at 5.2%. Whilst house price growth may ease further in the coming months, low mortgage rates and a shortage of properties available for sale should help support price levels.
