The Autumn Statement – how does it affect you?
The Chancellor, George Osbourne, today gave the annual autumn statement highlighting a wide range of economic issues, and we look at how these could affect you.
The first point concerns the economy as a whole. As most of you will know we have just emerged from the double-dip recession that has been affecting the UK industry since 2007, after a period of small growth in the last quarter. However this does not seem to be enough to save the economy from contraction over the year, as a shrinkage of 0.1pc has been predicted by the chancellor. While this doesn’t represent overall growth for the year, it is a step in the right direction.
The next point to be made is in reference to the 40% tax rate band. The minimum income level will rise 1pc from £41,450 to £42,284; but at a slower rate than inflation. What this means is that by the time we reach 2016 there will be an extra 400,000 middle class taxpayers in this band, essentially meaning that those people will be worse off than they are now. However the Chancellor was still optimistic about this, claiming that higher rate tax payers would in fact be better off from 2013/2014 due to changes in personal allowance.
Some of the best news was associated with the planned 3pc fuel duty rise in January, which has been scrapped. Transport is the single largest personal expense that is regarded as ‘crucial’, and increases to the cost of commuting would have been a further setback for those that are already feeling the strain on their finances.
Pensions were also on the agenda, and the basic state pension will rise by 2.5pc, up to £110.00 per week. However the increase in most working age benefits will only be 1pc, which is below the rate of inflation. While this means that people will physically have more money, they will not be able to afford as much with it.
Other points to consider are a 1pc decrease in corporation tax, a rejection of the ‘mansion tax’ idea as proposed by deputy Prime Minister, Nick Clegg, an 80pc increase in convictions for tax evasion over the last year, no tax on new property, and an increase to the overall ISA limit in April, which will be £11,520.
On the face of it, although some of the autumn statement does seem to have a positive twist to it, there is still much to be concerned about. Pension annuities are still at a low and increasing below the rate of inflation, interest rates on savings are low in reference to both cash and stocks and shares, the UK housing market is failing to make any real steps towards recovery, and the Chancellor has admitted it is likely to be 2018 before we see any real improvement. If you add to this the massive threat that the faltering Euro poses, it is clear to see that there are still some very trying times to come.
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