Quick take: Autumn Statement 2023 highlights – Simon Eardley, Head of Policy & Partnerships, Mersey Maritime
On Wednesday 22nd November 2023, the Chancellor of the Exchequer delivered his much trailed in the media Autumn Statement to the House of Commons. Coming just over a year since taking office following the unprecedented economic turmoil wrought by the brief Liz Truss / Kwasi Kwateng premiership/chancellorship, Mr Hunt appeared likely to have more fiscal room for manoeuvre compared to expectations outlined in the Spring Budget 2023. Indeed, Jeremy Hunt argued that this was an “Autumn Statement for Growth”, probably the penultimate opportunity for him to make a significant impact on the future direction of the economy before the next general election which we may well be in the throes of 12 months today.
A quick summary of the main announcements that may be of interest here and a little commentary alongside:
- The Office for Budget Responsibility is forecasting that GDP will grow by 0.6% in 2023, 0.7% in 2024, 1.4% in 2025, and 2.0% in 2026, with CPI inflation falling to 3.6% by 2024 before returning below the 2% Bank of England target in 2025.
- Public sector net debt is set to rise to 98.6% of GDP in 2024/25 before falling to 96.3% in 2025/26 and 95.5% in 2026/27, while the budget deficit is forecast to decrease from 1.9% of GDP in 2023/24 to 0.5% in 2024/25 and 2025/26 respectively.
- The main rate of employee National Insurance contributions was cut from 12% to 10%, effective from January 2024. Similarly, the self-employed rate of National Insurance contribution was slashed from 9% to 8% and the Class 2 compulsory contribution of £3.45 per week was abolished altogether.
- The temporary three-year full capital expensing scheme for machinery and technology spending for businesses – introduced in the Spring Budget 2023 to replace the Super Deduction and offset the increase in corporation tax rate – was made permanent.
Both these measures have been talked up as ‘the biggest tax cuts for working people and British business ever’ which is some rhetoric but they have been widely welcomed by independent organisations and commentators ranging from Martin Lewis of Money Saving Expert to the CBI, the latter having campaigned for ‘full expensing’ to be made permanent in recent years.
A word of caution! Many would argue that whilst these tax cuts are clearly of significance they sit within this challenging context: Tax changes in this Autumn Statement reduce the tax burden by 0.7% of GDP (national income), but it still rises in every year to a post-war high of 37.7% of GDP by 2028-29. The impact may in practical terms feel somewhat limited as a result.
- Financial incentives for investment zones and tax reliefs for freeports were extended from 5 to 10 years, along with the announcement of a new £150m Investment Opportunity Fund. In addition, Hunt confirmed that there will be new investment zones in the West Midlands, the East Midlands, Greater Manchester and Wrexham & Flintshire.
For the maritime industry, this is perhaps one of the more eye-catching announcements in respect of Freeports. With many of those originally announced now operational, there has previously been a call for the extension of tax incentives to boost the confidence of investors, a key priority theme behind the policy which has been championed by the Prime Minister for many years. Extending the date at which tax incentives were due to expire from 2026 to 2031 will provide more certainty to investors and increases the attractiveness of Freeports as a destination for inward investment, such as the one here in the Liverpool City Region.
As ever, these major statements from the Chancellor come with a strategic policy angle in terms of management of the economy but also a political narrative too. They must be viewed within that context over the next 12 months and beyond that too as all political parties seek to put their case to the electorate in due course. The old adage, ‘It’s the economy, stupid!’, has a habit of repeating itself!
Read more from HM Treasury HERE