This is our live coverage and analysis of the Autumn Statement 2012, due to be delivered by Chancellor George Osborne at 12.30pm on Wednesday 5th December.
13:24 – As the Chancellor takes a seat and Ed Balls stands to deliver his response, that’s the end of our live blog for the Autumn Statement 2012. We will now start work on our Autumn Statement 2012 Briefing Note, containing all of the key personal finance measures you need to know about, and aim to have this published later this afternoon. Thank you for reading!
13:21 – Osborne moves onto some popular measures. As we predicted earlier, he cancels the 3p fuel duty rise which was scheduled for January. Cancelling rather than simply postponing this will be a very popular move.
13:15 – The Capital Gains Tax (CGT) annual allowance and Inheritance Tax (IHT) nil rate band are both being increased by 1% over the course of the next couple of tax years. This is good news for investors and those with larger estates.
13:10 – Some announcements on pensions. Annual Allowance is reduced from £50,000 to £40,000, as widely expected. What wasn’t expected was the Lifetime Allowance being cut from £1.5m to £1.25m. Some concessions for those using Capped Drawdown (Unsecured Pensions) with the maximum income limit returned to 120% of GAD.
13:06 – Osborne refers to a tax rate on the rich that raises no tax as a ‘con’, describing the failed 50p top rate of income tax which saw fewer wealth individuals paying income tax. He then rules out the mansion tax that the Lib Dems really, really want.
12:56 – As if to illustrate our previous point, 10 year Gilt yields remain unchanged at 1.816%. Of course real impact of UK losing its AAA rating, should it happen, would take longer than a few minutes to happen. Investors are probably still digesting contents of this Autumn Statement and waiting for more announcements.
12:51 – Interesting to see William Hill issuing 5/4 odds that the UK will lose its AAA credit rating by June 2013. If this happens, we think it is unlikely there will be much impact on Gilt yields. UK is still very much a ‘safe haven’ relative to its continental neighbours. Gilt yields are being driven by Bank of England policy rather than credit worthiness. It would represent a real political blow to the coalition government however.
12:43 – The latest Office for Budget Responsibility economic growth forecasts are reduced as a result of previously overoptimistic net trade figures, with the eurozone sovereign debt crisis contributing to this reduction. They forecast that the British economy will shrink by 0.1% this year.
12:35 – George Osborne faces a hostile crowd as he begins the delivery of his Autumn Statement with the comment “Our economy is healing.”
12:20 – Some reinforcement of traditional Tory values during PMQs, with David Cameron saying “raising money, not punishing success”, is the key to economic success, when referring to the failure of the 50p income tax rate introduced by Labour which has cost the economy £7bn in lost tax revenue.
12:11 – After an amusing slip-up by David Cameron (referring to duties in “my house” rather than “this house”), Cameron and Miliband are having their usual spat over funding for the NHS budget. They appear to be arguing over the health budget that a Labour government might or might not have implemented, resulting in a rather pointless debate!
11:51 – Tax simplification is likely to be a feature of the Autumn Statement this afternoon. Moves to collect more tax from big multi-nationals would be popular with the voting public, although it is important not to forget the contribution these firms make to the UK economy through employment.
11:25 – A quick poll of the team here at Informed Choice today suggests that popular Autumn Statement measures would be cutting VAT and fuel duty. A cut to the main rate of VAT feels unlikely, with tax revenues under pressure and this being something Labour have previously urged. Postponing the January increase to fuel duty is a more likely sweetener the Chancellor could offer this afternoon.
10:18 – The big political focus today is likely to be on the length of time it is taking to close the budget deficit (the gap between what the government spends and what it receives in tax revenues). The time it is taking to do this is likely to be eight rather than the originally planned five years, resulting in a longer period of ‘austerity’ for the UK.
What this means in practice is another three years of spending cuts and higher taxes, although there are arguments to bring down taxes using any savings from spending cuts, in order to stimulate spending and help the economy grow, which would also help reduce the deficit. There is a fine balance to be had between spending cuts, tax rates and economic growth. We hope the Chancellor can find the right balance today.
09:36 – The Times has reported today that the Office for Budget Responsibility (OBR) is likely to revise its economic growth forecasts down from the 0.8% in 2012, predicted in the Budget earlier this year, to near to zero. Their 2013 forecast is also likely to be revised down from 2% to close to 1%.
These growth forecasts are important because growth in the economy is one tool the Chancellor relies upon to reduce the national debt.
09:23 – Good morning, and welcome to live coverage of the Autumn Statement 2012 from Informed Choice. We have woken up this morning in Cranleigh to a light dusting of snow, causing all of the usual road closures and train cancellations we have grown to expect from ‘not even slightly adverse’ weather conditions in England.
Photo credit: Flickr/HM Treasury
