Osborne Admits Austerity Will Continue Until 2018

07/12/2012 14:30 GMT | Updated 04/02/2013 10:12 GMT

Let's start with the important bit. The debt target will be missed. Despite stressing that the deficit has fallen by a quarter under the government's economic strategy, the Chancellor admitted in his Autumn Statement that debt will not be falling against GDP until 2016. Austerity is here to stay, until 2018, it seems. However, although his address demonstrated the grim reality of our current economic climate, the Chancellor spoke with optimism and confidence when relaying a list of measures which he firmly believes will bring the country through the age of austerity.

The good news is that there was some in Osborne's statement this week. There is to be a 1% increase in welfare benefits which seeks to raise £3.7 billion a year, the state pension is to rise by 2.5% next year and the personal income tax will rise to £9440, "in touching distance" with the £10,000 target (which was a Lib Dem priority). In addition, corporation tax will be cut by 1% to 21%, the "lowest rate of any major Western economy", and further investments in rail were promised which will no doubt please many commuters. However, the biggest cheers of all came when the Chancellor announced that his planned 3p fuel duty rise in January would be not delayed, but cancelled. This was, perhaps, the best news heard all day.

Keeping with the slogan "We're all in this together", Osborne stressed that the government plans to crackdown on multi-national tax avoidance which could raise up to £2billion a year, and the rich will pay a bigger share of income tax under the Coalition, though a mansion tax appears to be a no-go, much to the disappointment of Nick Clegg.

Perhaps one of the biggest downsides of the Chancellor's statement was his promise to introduce legislation which will cut the benefit bill. Despite his serious tone, Osborne stated that the new bill will cut costs, not standards. He claimed that crime is down, as are NHS waiting times and school standards have been dramatically raised, all of which will continue under the Coalition government, he stressed.

Whether Osborne's rhetoric will prove promising is yet to be proved, however, the Autumn Statement today largely appeared more optimistic than expected. Yes, we will miss our debt target and we continue to struggle on through austerity, but there was some light in the Chancellor's address which many will take pleasure in. Welfare concessions and the drop of fuel duty measures added a positive outlook to what continues to be a hard economic road ahead, although that said, shadow Chancellor Ed Balls did not appear convinced. Balls stated that the UK's growth is lower than the US, France, and Germany, highlighting that we are "falling behind in the global race" and added that the government's fiscal strategy was "in tatters". Only time will tell whether the government's economic strategy was the right course to follow, indeed it looks like we may not know until 2018 when one hopes we will have moved on from the age of austerity towards a clearer economic climate.