The Autumn Statement – Key Announcements

Published: Posted on


Alice Pugh provides an overview of the key announcements to come out of the Autumn Statement. 

For futher analysis see: The Autumn Statement - The Impact on the West Midlands

The Autumn Statement was finally released last week detailing government tax and spending plans. The budget comes at a time of significant political and economic turbulence. The government has significant challenges that it will need to tackle if it wants to encourage growth and levelling up. Significant challenges facing the government include:

  • Rapidly rising inflation: Inflation has risen to 11.1% in the 12 months up to October. This is the highest rate of inflation since the 1970s. Whilst, the largest contributor to the higher rate of inflation is large energy price increases, food and beverages inflation was 16.4% since the same time last October.
  • Energy Prices: Energy prices are set to continue to rise with City REDI forecasts showing that energy prices could rise as high as £6,600 in April 2023 without a price cap for households. City REDI also forecasts that for a small business energy prices will be between £11,650 and £20,077 from April 2023, based on average gas and electricity usage.
  • Tight Labour Market: Job vacancies and unemployment are at a ratio of 1:1. This means that for every unemployed person there is one vacancy. Simply put, there is a labour shortage in the UK. The shortage largely comes from significant numbers of people leaving the workforce to become economically inactive. A significant cause of this is people retiring after the pandemic and an upturn in people with long-term health conditions forcing them to leave the workforce. Between 2019 and 2022, the number of people who became economically inactive due to long-term sickness rose from 2 million people to 2.5 million.
  • High interest rates: Interest rates are at their highest since before the financial crash, at 3%. Whilst historically this isn’t a very high interest rate, banks, businesses, people and investors, have become used to low interest rates around which it was easy to borrow money. The government has also been used to the same and now it has become expensive for them to borrow money, eating into potential budgetary spending.

The OBR, in its forecasts, also highlighted the challenges that the government will be facing over the next few years:

  • Recession– As of the third quarter of 2022 the economy has entered a recession, that the OBR forecasts to last for a year, with an expected 2% fall in GDP
  • Living standards– Inflation is set to erode real wages and reduce living standards by 7% by the 2023 financial year, wiping out the last 8 years of growth.
  • Unemployment– This is set to rise from 3.5% to 4.9% by 2024
  • The Deficit– Is set to rise from £133.3bn (5.7% of GDP) last year, to £177.0bn (7.1£ f GDP) this year. However, borrowing will then fall to £140bn (5.5% of GDP), as a result of tax rises and scaled-back support, continuing to fall to £69.2bn (2.4% of GDP) in 2017/28.
  • Public Spending– Despite expected departmental cuts from 2024, total public spending rise from 39.3% of GDP to 43.4%in 2017/28. This is 2.9% higher than forecast in March, reflecting higher debt interest rates and welfare spending raising cash spending.
  • Government Debt– higher borrowing is set to push underlying debt from 84.3% of GDP to 97.6% in 2025. With the share of revenues consumed by servicing the debt rising from under 5% in 2019/20 to 8.55 in 2017/28, meaning public finances will be more vulnerable to future shocks or swings in market sentiment.


Benefits and Wages
  • The household energy price cap will be extended for one year from April 2023; however, the cap will increase to £3,000 per year instead of £2,500
  • Households on means-tested benefits will receive £900 support payments next year.
  • Pensioners will also receive a payment of £300, with individuals on disability benefits receiving an additional £150.
  • Windfall tax on profits of oil and gas companies will increase from 25% to 35%, extending until March 2028.
  • New temporary 45% tax on companies that generate electricity, is to come into place in January.
Investment Zones
Trailblazer Devolution deals

The announcements made in this budget are significant, it is a massive budget, with tax burdens rising even higher to levels not seen since after the second world war. The budget is front-loaded with spending on extensive support schemes; however, it is back-loaded with cuts from 2025. Notably just in time for the 2025 general election. The tax and benefit changes are far more progressive than the changes within the ‘mini budget’, with higher earners taking on a greater tax burden than had been expected. However, what is clear is that this budget is a sombre affair, and we will be continuing towards a second round of austerity from 2025.

This blog was written by Alice Pugh, Policy and Data Analyst for City REDIWMREDI, University of Birmingham.

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.

Sign up for our mailing list.

Leave a Reply

Your email address will not be published. Required fields are marked *