Follow fundweb.co.uk for the latest on Chancellor George Osborne’s autumn statement.
For the Office for Budget Responsibility Economic and Fiscal Outlook November 2011, click here.
Osborne: Labour’s economic reputation will never recover with Balls as shadow chancellor
Osborne: Balls claims we are borrowing too much but wants us to borrow more. It is a permanent reminder of why the Labour Party should not be trusted again.
Balls: Protecting our economy is more important than protecting a failed economic plan.
Balls: The Chancellor must listen to the head of the International Monetary Fund (IMF). “How many more billions must be borrowed for the Chancellor to see sense?”
Balls: The Chancellor must see sense, rather than cling to a fantasy that cannot change course.
Balls: OBR forecast downgraded growth in Britain, and upgraded growth in the euro area.
The Chancellor’s full speech can be found here.
For the full autumn statement document click here.
Ed Balls, shadow chancellor: Osborne’s plans are a colossal failure.
Osborne: 3p fuel duty rise in January cancelled.
Osborne: £1.2 billion pledged for schools, £600m for free schools.
Osborne: OBR predicts unemployment of 8.1% for 2011, 8.7% in 2012, and 6.2% by the end of the forecast.
Youth unemployment has been rising for 7 years. Little comfort can be taken from the fact that such a trend is affecting all Western countries. The situation is caused not by lack of jobs but lack of skills.
Osborne: £1 billion to be allocated to regional growth fund.
Osborne: “Planning laws need reform.”
Osborne: Government has worked with pension funds to unlock £20 billion for infrastructure spending.
Osborne: National infrastructure plan unveiled, with more than 500 projects identified.
Osborne: Financial services sector is important, but support is needed for other sectors.
Osborne: Bankers’ levy to rise.
Osborne: The UK will not back the financial transactions tax. It is not a tax on bankers, but a tax on pensions.
Osborne: Economy became dependent on a poorly regulated City of London. It relied on £1 in every £8.
Osborne: Launching national loan guarantee scheme to reduce interest rates for small businesses.
Osborne: “Britain will pay its way in the world.”
Osborne: State pension age to increase to 67 from 2026.
Osborne: Basic state pension to rise by £5.35.
Osborne: “Call off strikes tomorrow.”
Osborne: Structural deficit to fall from 4.6% of GDP to 0.5% in next five years.
Osborne: Public sector pay rises to be limited to 1% after pay freeze ends.
Osborne: “We are set to meet budget rules and Britain will weather the storm.”
Osborne: “The Office for Budget Responsibility does not predict recession for Britain but have revised down short-term growth prospects for the country, Europe and the world.”
Osborne: “We will do whatever it takes to protect Britain from the debt storm by doing all we can to build foundations of future growth.”
The European Commission has shown a drop-off in economic confidence.
The Bank of England’s lending to consumers data for October shows unsecured consumer credit increased by just £49m over the month.
This is the smallest rise since January and suggests consumers remain reluctant to take on new debt amid the uncertain outlook on jobs and growth.
October saw a net borrowing of £93m on credit cards, falling from £145m in the previous month, while £44m was repaid on other loans and advances after September’s net borrowing of £435m.
Howard Archer, the chief UK and European economist at IHS Global Insight, says: “Essentially flat unsecured consumer credit in October suggests strongly that consumer appetite for taking on new borrowing is very low while there is also a strong desire of many consumers to reduce their debt.”
However, Archer warns that “stressed borrowing” could be seen in the months ahead as households are forced to borrow money in light of high inflation, low wage growth, tight fiscal policy and rising unemployment.
Elsewhere, Nationwide has revealed that house prices crept up by 0.4% in November, with an average price of £165,798.
According to the building society, the price of a typical home is 1.6% higher than a year ago.
Robert Gardner, chief economist at Nationwide, says: “House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook.
“But, with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next twelve months.”
Ahead of the Chancellor George Osborne’s Autumn Statement, the Trade Union Congress (TUC) has released a 10-point plan to “kick-start the UK’s flailing economy”. It reads as follows:
- Making quantitative easing work for the economy: The TUC has called for quantitative easing to be used to buy corporate bonds or chanelled in a government-owned investment vehicle.
- Reversing the VAT cut: It claims a cut would lower inflation and raise wages.
- Raising capital allowances: Increased capital allowances “would encourage businesses to focus on the long-term and increase investment” the TUC argues.
- Investing in apprentices and young people: More must be done to support the creation of new apprenticeships, says the TUC, adding that there must be a government commitment that no young person will spend more than six months out of employment or training.
- Investing in energy-intensive industries: The TUC wants the government to copy German industrial policy support given to energy-intensive industries.
- Using procurement to support the economy: It argues procurement contracts should include apprenticeship, environmental or employment clauses.
- Protecting the science budget: Investment in science and engineering should be protected, says the TUC.
- Reversing the cut in support for the solar power feed-in tariff: The TUC wants the government to reinstate the feed-in tarrif.
- Reversing the public sector wage freeze: Recent research by Incomes Data Services (IDS) found that the median settlement for private sector pay deals in the three months to the end of September was 2.6% – still far short of what is needed to keep pace with living costs – but the median in the public sector remained at zero. The combined effect of the pay freeze, VAT increase and high inflation has meant a huge squeeze on the spending power of public sector workers.
- Introducing a one-off increase in child benefit: A one-off child benefit boost would give families across the UK some welcome relief in the run-up to Christmas, almost guaranteeing that money would go directly back into the economy. Child benefit is paid weekly to households across the UK, which means that the system to give Britain’s families a Christmas bonus is already in place.