United Kingdom

Details

  • Service: Insights, Economics
  • Type: Press release
  • Date: 05/12/2013

Autumn Statement 2013: Better growth but Chancellor sticks to austerity guns and banks revenue windfall 

Commenting on today’s Autumn Statement, Andrew Smith, KPMG’s Chief Economist, said: “After three years of almost continual downgrades to the growth outlook and corresponding increases to government borrowing projections, Mr Osborne was able to announce exactly the opposite - a double whammy of higher output and lower borrowing projections.

 

“1.4% growth this year, double the Office for Budget Responsibility’s March Budget forecast, is pretty much in the bag and next year’s forecast of 2.4% could start to look conservative if this cycle follows the normal pattern. Just as forecasters generally underestimate the depth of the downturn, they also underestimate the speed of upturns. 

 

“The wrong sort of growth? Purists may complain that the recovery is over-reliant on the consumer, but with household spending accounting for some two-thirds of total demand, it is inevitable that consumption has to do the heavy lifting in the early stages.

 

“And as a consequence of the more buoyant economy, government borrowing this financial year is expected to be as much as £9bn below budget.  But even so, the deficit is running at double the rate projected in 2010 and the Chancellor still looks set to miss his supplementary fiscal target– that total outstanding public sector net debt should be falling as a share of GDP in 2015-16.

“Despite announcing a raft of business friendly measures today the Chancellor was clear that austerity has a long way to go. In that, Mr Osborne has stuck to his austerity guns, banking the “windfall” with the knock-on effect of lowering the whole future deficit and debt profile. 

 

“The one thing which could transform the outlook for the public finances would be a significant catch-up of the output, and hence the tax revenue, lost in the last five years. But given uncertainty about the amount of spare capacity in the economy the OBR is reluctant to assume a sustained period of above-trend growth and it is early days to start counting too many chickens.”


Ends


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For further information please contact:
KPMG Press office
Tel:  +44 (0) 20 7694 8773
Sorrelle Cooper, Head of the Press Office, KPMG
Mobile: +44 7932 078218
sorrelle.cooper@kpmg.co.uk  


About KPMG:

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  KPMG International provides no client services.

 

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Sorrelle Cooper

Sorrelle Cooper

Head of the Press Office

KPMG in the UK

020 7694 8527

Email Sorrelle