The context in which today’s Autumn Statement will be given

29 November 2011

With the Bank of England having downgraded its growth predictions by 50% since March, gloomy economic reality sets the scene for today’s Autumn Statement. The broader Eurozone crisis similarly threatens Britain’s own economic recovery.

This follows a recent warning from the Centre for Economics and Business Research about the 50p income tax rate damaging the British economy. In spite of this, the tax is very unlikely to change, with the Chancellor’s Chief Secretary Danny Alexander having recently spoken out in its defence.

Much discussion recently has focused on the notion of a Plan B for the economy, hinting at the notion that Plan A is not working in generating growth or paying off the deficit. The joke within Whitehall is that there is a Plan B – more of Plan A. The official line is the government has no secret strategy for the economy or deficit reduction: only its announced approach.

The Autumn Statement is expected to include a big credit-easing scheme for small and medium sized businesses. Interestingly, it is medium-sized firms – defined as those with 50 to 250 staff and a turnover of between £25 million and £500 million – that are expected to get the most attention.

Measures to ensure taxpayers underwrite some mortgages, along with a scrapping of tax breaks on pensions have also been reported.