All eyes on George Osborne's Autumn Statement
All eyes and ears will be on the Chancellor of the Exchequer, George Osborne, today (Wednesday 5th December) as he presents his Autumn Statement 2012 against the backdrop of an economy still struggling to recover from the longest and deepest recession in generations.
The Statement provides an update on the Government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility. These forecasts are published alongside the Autumn Statement on 5th December.
Mr Osborne will give his views on the outlook for the UK economy, the state of the public finances and what that means for the government's spending plans and programme of austerity measures.
Anyone hopeful of a rosy economic forecast should think again, as the day is likely to be one of bad news on growth, borrowing, debt, taxes and broken fiscal rules. The chancellor has already acknowledged there are "no miracle cures" to the country's economic strife.
In an attempt to give a short-term boost to the economy ahead of the 2015 election, Mr Osborne announced on Tuesday he was releasing £5bn for capital projects, mainly funded by cutting Whitehall departmental spending by 1% in 2013-14 and 2% the following year.
Alongside the chancellor's statement, the Office for Budget Responsibility (OBR) will publish the keenly awaited economic forecasts, which is almost certain to downgrade its forecasts for economic growth. In the Budget in March, the OBR forecast 0.8% growth this year, 2% next year and 3% growth by 2015.
The failure of the economy to recover means that now looks extremely optimistic.
The result is that if the chancellor wants to meet his targets he will need to impose more spending cuts or tax increases, on top of the austerity measures already announced.
Mr Osborne is also hotly tipped to announce a cut in pension tax relief - currently individuals can put away up to £50,000 a year without being taxed. However, current speculation says that this may be cut to £40,000 in the Autumn Statement.
Mr Osborne is also is likely to reaffirm his intention to increase the personal tax allowance to £10,000 by April 2015, with a rise in April 2013 already announced.
