The UK’s encouraging fiscal position provides Chancellor Hammond with more room for manoeuvre in his upcoming autumn statement.
During George Osborne’s reign at the Treasury, addressing the UK’s productivity challenge took a back seat role to tackling the deficit. In Osborne’s first budget statement (June 2010) the word productivity wasn’t even mentioned. Conversely, ‘deficit’ was uttered 19 times. Indeed, six of the former Chancellor’s budget speeches failed to mention the word productivity at all. However, Osborne’s last two budgets did see a new focus on productivity with the word appearing 11 times in March. This was perhaps in recognition of the UK’s woeful productivity performance which couldn’t be ignored any longer. Tackling the deficit assumed productivity growth would hold up. It didn’t. Continue reading
An extension to budget deficit reduction amidst weaker productivity growth and some measures to fix the latter – it feels like Budgets and Autumn Statements have always been thus. Last week was no different and changing the narrative is tricky. Therapy for productivity is key. It just may need to be more of the ‘shock’ variety. Continue reading
Chancellor Hammond’s first Autumn Statement will also be his last. From now there will be a solitary annual Budget event per year. Its swansong was a low key affair. The financial crisis still casts a long shadow with the deficit reduction road lengthened again. But it didn’t stop a regrouping for a new attack on economic public enemy number one – poor productivity.
During George Osborne’s reign at the Treasury, addressing the UK’s productivity challenge took a back seat role to tackling the deficit. However, Philip Hammond has put productivity back on the agenda with the word appearing fourteen times in his speech today. In fact, the UK’s dire productivity performance is a major factor behind the poor state of the public finances. Continue reading
For seasoned investors, the term ‘Black Monday’ is a reminder of the global stock market crash that occurred on 19 October 1987. Meanwhile the Wall Street Crash (29th October 1929) was also known as ‘Black Tuesday’. This was when panic selling reached its peak and followed steep share price falls on the previous day, ‘Black Monday’, and on the 24th October 1929, ‘Black Thursday’. The third day of the week hasn’t escaped the prefix ‘Black’ either, with the 16th September 1992 dubbed ‘Black Wednesday’ in the UK. This was when currency market speculators forced the UK to remove sterling from the Exchange Rate Mechanism (ERM).
Underneath the Spending Review headlines was an old, but very important assumption – the UK gets more productive, and fast. Higher productivity means higher wages and thus tax receipts. There are signs of improvement but productivity has fallen short of expectations in recent years. (And Northern Ireland continues to lag the rest of the UK.) Will this time be different?
The Chancellor has developed something of a reputation for over-promising and under-delivering when it comes to fiscal austerity. He certainly didn’t shed this image today in the first all-Conservative Spending Review since the mid-1990s.