Autumn Statement 2016 – key points

Philip Hammond, Chancellor of the Exchequer, delivered his first autumn Statement yesterday, highlighting that “the government will build an economy that works for everyone”.  

24/11/2016, news

Below are the key points for small business:

  • Unemployment is at an eleven year low; employment grew fastest in the North East over the last quarter
  • Despite slower growth in the economy, the labour market forecast is to remain robust
  • Office for Budget Responsibility (OBR) growth forecast:
    • 2016 - 2.1%,
    • 2017 - 1.4% - this downgrade is due to lower investment, weaker consumer demand, greater uncertainty and higher inflation. However this forecast is equivalent to the forecast for Germany and higher than France and Italy
    • 2018 - 1.7%
    • 2019-20 - 2.1%
    • 2021 – 2.0%
  • OBR forecasts borrowing of £68.2bn this year, then £59bn in 2017-18, £46.5bn in 2018-19, £21.9bn in 2019-20 and £20.7bn in 2020-21
  • Public sector borrowing will fall to 3.5% this year, this will continue to fall, reaching 0.7% by 2021-22
  • Government no longer seeking surplus in 2019-20
  • New target for net debt to be falling by 2020
  • Government recognise the need of investment to close the productivity gap; The UK lag behind USA, Germany, France and Italy
  • Additional high value investment in infrastructure and innovation will be prioritised, directly contributing to raise productivity
  • A new £23bn national productivity investment fund is being formed to support Innovation and Infrastructure over the next 5 years; raising productivity is essential for the high wage high skill economy
  • The UK does not invest enough in research, development and innovation.  As the pace of technology advances and increased competition globally, we must build on our strength of technology and science innovations to ensure the next generation of discoveries are developed and produced in Britain. An extra £2bn a year will be invested in research and development by 2021
  • 1-2% of GDP will be invested in economic infrastructure
  • Ambition for UK to be a world leader in 5G mobile.  Over £1bn will be invested in digital infrastructure. From April 2017, 100% business rates relief for five year period on new fibre infrastructure
  • Doubling UK export finance capacity, making it easier for UK businesses to export
  • £400m invested into venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms
  • Devolution - Giving London greater control over delivering employment support services
  • Corporation tax is to be reduced to 17%
  • Increase rural rate relief to 100%, giving small businesses a tax break of up to £2,900 per year
  • Insurance premium tax will rise from 10% to 12% from June 2017
  • Income tax threshold to be raised to £11,500 in April 2017, this will rise to £12,500 by 2020. Higher rate income tax threshold will rise to £50,000 by 2020 and will continue to rise with inflation thereafter
  • The National Minimum Wage will rise from £7.20 to £7.50 from April 2017. This will result in an extra £500 a year for a full-time worker
  • Employee and employer National Insurance thresholds to be equalised at £157 per week from April 2017
  • From April 2017, universal credit taper rate will be reduced from 65p to 63p.  This will increase the incentive to work and encourage progression in work