Likely impacts of the Autumn Statement

Professor Adele Atkinson explains what effect the Autumn Statement could have on many UK households.

A supermarket receipt on a table with household items

"Jeremy Hunt has delivered a budget designed to slow inflation and return the country to growth. The approach that he has taken is consistent with the sporting mantra of ‘no pain, no gain’, and it appears that despite some targeted support, many households will continue to suffer.

"There is some relief for pensioners and people living on means-tested benefits, disability benefits or state pension, with the confirmation that their income will rise in line with inflation and be topped up with cost-of-living payments. Rent caps in the social rented sector will also help some, but many renters and buyers remain vulnerable to rent and interest rate increases.

"The chancellor has also announced that both National Insurance and the lower tax thresholds will be frozen, and threshold for higher tax will also be brought down. This approach to raising tax revenues will have a particularly negative impact on the lowest paid who may find themselves moving into the lower tax band for the first time.

"When people pay more tax, their spending power reduces. This may curb demand and therefore slow inflation. But it’s impossible (not to mention morally abhorrent) to reduce demand in households that are already cutting out essentials. In such situations, it is highly plausible that the overall impact of a tax increase combined with high prices will be to put pressure on wages and actually increase inflation, particularly given the continued labour shortages across our economy. And whilst the chancellor has promised ongoing - but reduced - help with energy bills beyond April 2023, he still has not explained how he expects ordinary households to put food on the table this winter. Neither has he provided hope for our local businesses trying to stay afloat despite the endless stream of challenges they have faced in recent years. They will be hard pressed to find customers with money to spend for the foreseeable future."

Notes for editors

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