eremy Hunt is expected to promise to help the economy weather “the economic storm” as he unveils an “eye-watering” £54 billion package of tax hikes and spending cuts in his Autumn Statement on Wednesday.
The Chancellor will vow to take “difficult decisions” as he sets out a plan to plug an estimated £50-60bn fiscal black hole, reduce double-digit inflation, and ease the pain of an expected recession.
Mr Hunt is expected to tell the House of Commons that his economic plan will put the country “on a balanced path to stability” and tackle the “enemy” of inflation, which soared to a 41-year high of 11.1 per cent on Wednesday.
In the statement due at 11.30am, he is expected to impose stealth taxes by freezing the rates at which workers pay higher rates, drawing more into higher tax brackets.
He is thought likely to raise the minimum wage and lower the threshold for which the 45 per cent top rate of income tax is payable from £150,000 to £125,000.
The Chancellor is also expected to press ahead with controversial plans to allow local authorities to further raise council tax without referendums, despite the policy proving controversial in opinion polls.
He has already confirmed that the energy bill support package, proposed for two years under Liz Truss, will be revised from April.
Meanwhile, the Office for Budget Responsibility (OBR) will publish its long-awaited forecasts later on Thursday, which are expected to detail bleak prospects for an economy teetering on a recession.
UK should expect some ‘pretty bad economic news’ – analyst
Torsten Bell, chief executive of the Resolution Foundation think tank, said he was expecting some “pretty bad economic news” ahead of the statement.
Mr Bell told Sky News the UK faced a “grim economic outlook”, with the economy growing very slowly and “possibly ending this Parliament as weak as it began”.
He added that this would be “much weaker than we were previously expecting”. The head of the economic think tank said that he expected unemployment to rise, “which is the opposite of what we’ve been seeing in the recent past”.
Mr Bell also added that tax rises would largely hit middle and higher-income households, but that lower-income households were seeing “the highest inflation rate right now and finding the cost-of-living crisis hardest to deal with”.
What are the timings for the Autumn Statement?
Mr Hunt was initially scheduled to make his statement at 10.30am, but it will take place an hour later so Rishi Sunak can first make a statement about the G20 summit.
The Chancellor will first appear outside No 11 Downing Street at around 10.40am, before heading to the Commons where he is expected to make the announcement around 11.30am.
The statement is expected to last around an hour, with supporting documents including the Office for Budget Responsibility’s (OBR) forecast published on the government’s website.
Labour’s Rachel Reeves, the shadow Chancellor, will then deliver a response to the announcement. The OBR will then set out its workings in a presentation at 2pm, with the fiscal watchdog giving its assessment of the UK’s economic outlook.
Meanwhile, Jeremy Hunt will do a round of sit-down interviews later today after his announcement where he will be grilled on its details.
Treasury Select Committee chair ‘pleased’ independent forecast to be released alongside statement
Harriett Baldwin, who chairs the Treasury Select Committee, said she was “pleased” the government will be releasing an OBR forecast alongside its autumn statement today.
Ms Baldwin told Times Radio: “That’s the number one thing that we’ve been calling for and we’re pleased we’re going to see it today”.
The Conservative MP said the Treasury Committee hoped the Chancellor’s statement would help the UK’s “productive growth capacity”, but that she does expect it to involve some “delays to infrastructure projects”.
Ms Baldwin added that she expected more interest rate rises later in the year, but worried something had “gone wrong” in the Bank of England’s forecasting models, “particularly around the tightness of the labor market”.
Under the disastrous mini-budget in September, an OBR forecast was not prepared and released, which provoked controversy given the scale of the measures announced in the package which spooked the financial markets.
Pictured: Jeremy Hunt prepares Autumn Statement
Energy windfall tax could increase
According to reports, Mr Hunt is preparing to hit electricity generation companies with a 40% windfall tax on their “excess returns”.
The Chancellor could announce a levy on the extra profits made by generators above a certain price per megawatt hour.
He is also said to have planned to raise the existing windfall tax on North Sea oil and gas operators, increasing the tax from 25% to 35% and extending it by two years until 2028.
Prime Minister Rishi Sunak had initially declined to introduce a windfall tax, but did so as Chancellor in May, under pressure from opposition parties.
What key areas will be addressed in the statement?
There will be several key areas which Jeremy Hunt is expected to address in his Autumn Statement, all of which have an impact on the personal finances of millions of households.
Among them will be:
, Tax hikesMr Hunt has already pledged that all of us will be paying more tax after the statement. He is expected to freeze the rates and which workers enter new tax brackets, which will draw more into higher tax rates as inflation increases.
, Spending cuts: The plan is expected to include billions of pounds worth of cuts to public spending. However, the key details of where exactly these cuts will fall and which public services will be affected are not yet clear.
, Energy prices: Jeremy Hunt has already said that the Government’s Energy Price Guarantee, which provides support for the cost of energy bills, will be modified from April, and will not last two years in its current form as planned under Liz Truss. Exactly what support will come into place from then is expected to be revealed.
Benefits: The Chancellor is expected to say whether benefits will be uprated with inflation, which currently stands at over 11%. It has faced pressure to make the commitment, and Rishi Sunak when he was Chancellor had previously backed the measure.
Why is the Autumn Statement taking place today?
Good morning and welcome to our live coverage as Chancellor Jeremy Hunt prepares to unveil a painful combination of tax rises and spending cuts in his Autumn Statement.
The statement is due before noon, although timings could change.
So what exactly is the Autumn Statement? Traditionally, the Chancellor unveils their budget in spring, and the Autumn Statement serves as an update six months later.
However, this Autumn Statement is delayed. It had been due to take place on Halloween after the disastrous ‘mini-budget’ under Liz Truss in September, which spooked the markets.
The new PM Rishi Sunak and Chancellor Jeremy Hunt pushed back the timing to mid-November.
It is widely expected to mean that we are all going to pay more tax and spending cuts are also on the cards to fix a reported ‘black hole’ in the public finances of up to £50-60bn.