Autumn Statement: Credit Easing, Housing, Banks And Growth - What Are We Expecting George Osborne To Announce?
Saturday’s warning that the UK could slip back into recession could not have come at a worse time for the chancellor. George Osborne will deliver his Autumn Statement to parliament on Tuesday amid flat-lining growth, the Office for Budget Responsibility (OBR) slashing growth forecasts, unemployment rising as consumer confidence falls and a crisis in the eurozone, which is seen as even more threatening than the economic crunch of 2008.
Ed Miliband and Ed Balls, of course, have said the Autumn Statement should be an opportunity for the government to change its course. In a blog for the Huffington Post UK, the Labour shadow chancellor urged Osborne to make “the right choice”. “He can plough on regardless with a plan that is hurting, but not working to get the deficit down. Or he can stop blaming everybody else for his own mistakes and change course,” he said.
On Sunday morning the chancellor stood firm, telling the BBC: "We have got a deficit reduction plan that has brought us record low interest rates... we are absolutely going to stick to that plan."
But it’s not just the opposition who are urging the government to change its approach. Even business pressure group the CBI have called for Plan A+ to kick-start the UK economy as the eurozone sovereign debt crisis and weak domestic demand weigh on the country's growth prospects.
So what are we expecting from Tuesday’s statement and will it help produce a much-needed boost to UK PLC?
The OBR will cut its projections for growth for the next few years as the economic outlook continues to worsen, Osborne confirmed on Sunday. Ed Miliband has already said the slashed forecasts will deliver a "catastrophic blow" to the credibility of the coalition's deficit reduction strategy.
As trailed on Sunday, George Osborne is to detail a new government scheme to underwrite billions of pounds of bank lending to businesses. The plan is an attempt to get credit flowing to Britain's struggling small firms.
We know about the £1bn ‘Youth contract’, which will attempt to create hundreds of thousands of work placements for young people in a bid to tackle the growing cohort of 16 to 24-year olds out of work and education. But what is still unclear is how it will be funded – and if it goes far enough. The IPPR think-tank has recommended a different approach to tackling unemployment across the board, calling for the government to introduce a “job creation scheme” for anyone who has been out of work for more than 12 consecutive months, matched by an obligation to take up the offer.
The government has come under increasing pressure to halt January’s planned fuel duty increase – and there have been plenty of hints that Osborne will announce a cut on Tuesday. But with suggestions a cut in benefits for the unemployed and the disabled could be used to help hard-pressed motorists, and Nick Clegg promising “the broadest shoulders will carry the heaviest burden", will the government be able to pull off such a move?
The rise in fares is expected to be capped at 6% rather than 8%. Labour has already said the move will only bring fares down from "eye-watering" levels. "Commuters are facing a fares fiddle unless the government also reverses its decision to allow train companies to average out the revised fare rise across a range of tickets, meaning many tickets will still rise by a shocking 9% in the New Year."
The government is all about reducing the burden of red tape – and have even recruited ultra-libertarian head of the Institute for Economic Affairs think-tank Mark Littlewood to help them with the cause. Top of the list is employment law. Vince Cable has already announced some changes – will we see more in the chancellor’s statement on Tuesday?
Toll lanes on congested motorways could be built to relieve traffic and kick-start the economy, according to recent reports. Alan Cook, the current non-executive chairman of the Highways Agency, recommended that tolls should be built on any new motorways in a Whitehall-commissioned report.
What those on the left and right agree on is the need to bring forward investments in infrastructure, whether it is the Crossrail project in London or regeneration projects elsewhere.
Ian Brinkley, director of The Work Foundation, said: “While the Coalition has identified many of the right priorities on innovation and investment, it has yet to back them in a large-scale or co-ordinated fashion. With the UK facing one of the slowest economic recoveries on record, now is the time for the government to demonstrate its commitment to growth by moving forward in these areas on a far larger scale.
“If any short-term stimulus is required, it must be targeted at investment in areas which will also boost long-term growth, such as bringing forward more public investment projects, rather than on unsustainable tax breaks.”
What to watch out for: