It’s the Autumn Statement tomorrow, with Chancellor of the Exchequer, George Osborne delivering his pre-Budget report to the House of Commons at 12.30pm.
Here at Informed Choice, we will be watching the Autumn Statement closely, looking for any personal finance or investment implications that could have an impact on our clients.
We aim to produce our Autumn Statement briefing note by 5pm tomorrow afternoon.
As is always the case, there has been a lot of speculation about what will be in the Autumn Statement tomorrow.
Here are a few of the things we expect to see, would like to see or would not like to see in the Autumn Statement on 5th December 2012.
A grim outlook for the UK economy
We already know how tough it is out there in the real economy. Whilst the latest GDP figures show a recovery from the double-dip recession, sustaining this growth and achieving economic growth figures will be challenging.
The Office for Budget Responsibility will be publishing its latest forecasts at the same time as the Autumn Statement is delivered to parliament. We expect this to be grim reading.
One pessimistic forecast, from The Institute for Fiscal Studies, suggests that the Chancellor will need to fill a £23bn financial hole by 2017-18. Expect to see more tax rises for the better off and cuts for those who rely on state support.
More tinkering with pensions
There is always speculation about pensions and tax relief ahead of a Budget statement. This time is no different.
We expect to see a cut in the Annual Allowance for pension contributions that receive income tax relief, from the current level of £50,000 down to £35,000 (or £40,000, or £30,000).
If this does happen, the biggest impact could be on members of final salary pension schemes who will need to understand the value of future accruals to benefits.
Of course we don’t want to see any tinkering with pension rules. In order to allow people to plan for retirement, what the government should do is hand responsibility for pension policy across to an independent committee, setting rules for at least a ten year period at a time.
Pensions should not be political.
Incentives for infrastructure investment
Encouraging more investment in infrastructure projects is one way that the Treasury could help to stimulate the UK economy.
The big bucks available for doing this come from the assets of occupational pension schemes. We think that the Autumn Statement might include incentives for private investors to get investing in big infrastructure projects.
If this happens, investors will need to carefully consider the risks and opportunities for exposing their cash to such schemes. If they come with generous tax breaks, these will need to be weighed up alongside the danger of losing money in the actual investment.
No mansion tax
We know that the Lib Dems are desperate for a ‘mansion tax’; Vince Cable seems to mention it each time he is in front of a television camera. It is very unlikely they will get it.
What we might see in the Autumn Statement is concessions to the Lib Dems in the form of other tax changes. We expect to see news of a higher personal allowance which will undoubtedly be offset by more income falling into the higher rate income tax brackets.
A sweetener for the economy
Could this Autumn Statement include details of a ‘helicopter drop’ to help stimulate the economy? Coming so soon off the announcement of the Royal pregnancy yesterday, a measure like this would not only help boost economic growth but could really add to the feel good factor of consumers this side of Christmas.
Ailing retailers would also appreciate such a measure. As long as it doesn’t involve handing out blocks of 53 tonnes of cheese, as the Irish government did in order to stimulate the economy in November 2010, everyone should be happy.
What do you expect to see in the Autumn Statement tomorrow?
Photo credit: Flickr/julesjulesjules m
