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Ben Chu

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Nov 17 • 23 tweets • 3 min read

Chancellor Jeremy Hunt kicks off #AutumnStatement

Says priorities are "stability, growth, public services"...

..."High inflation is the enemy of stability....hurts the poorest the most"...

..."We need fiscal and monetary policy to work together".

Wants Treasury "lockstep" with the Bank of England...

..."Credibility cannot be taken forgranted"...

...2 new fiscal rules:

Debt falling as share of GDP in 5 years

Public sector borrowing below 3% in 5 years...

...New OBR growth forecasts vs March forecasts...

...."We have not raised headline rates of taxation"...

...Threshold for additional rate of income tax lowered...

...electric vehicles to pay excise duty...

....2025 stamp duty reduction ends...

...Key point on new fiscal rules 👇...

https://twitter.com/TorstenBell/status/1593207378954301440?s=20&t=Dzd-MyrmyWmjjtp8otM0mw

....Confirms public spending to grow only 1% a year from 2025 (after Spending Review period & next election) - below growth rate of economy...

...Confirms overseas aid remains at 0.5% of UK GDP - rather than rising back to 0.7%...

...Cites estimate that putting VAT on private school fees would raise £1.7bn but would also mean 90,000 independent school pupils switching to state sector (thus adding to pressure on state sector)...

...Claims £2.3bn more will go to schools (timescale not clear)...

....Also claiming £2.8bn extra for social care "next year"...

...On NHS Chancellor says: "We want Scandinavian quality and Singaporean efficiency" (doesn't say what model/level of funding he wants)...

....Chancellor promises £3.3bn extra a year for NHS (Note: NHS had pointed to £7bn gap)...

....NHS estimated funding gap... theguardian.com/society/2022/o…

...Chancellor going all out for UK "energy indepededence"...

There's a good Radio 4 doc coming out soon on that 😉....

bbc.co.uk/programmes/m00…

...Hunt confirms capital/infrastructure spending plans being cut...

...holding capital/infrastructure spending in cash terms equates to a roughly 1% of GDP a year cut relative to previous plans...

....a reminder of the previous capital/infrastructure spending plans...

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More from @BenChu_

Ben Chu

@BenChu_

Nov 14

Are we potentially facing "Austerity 2.0" in the #AutumnStatement because of the fallout from the #MiniBudget?

Or is it because of economic forces beyond the UK, such as the energy crisis and rising *global* interest rates?

Explanatory chart thread 🧵...1/

@OBR_UK

...To attempt an answer, go back to the last set of official forecasts we had from the @OBR_UK back in March.

The government was then projected to be borrowing around £32bn in 2026-27 (the final year of the forecast period) and to be *meeting* its fiscal rules...2/

@resfoundation

...The @resfoundation (similar to other forecasters) now expects borrowing in that year to be around £90bn and for the government to *break* its fiscal rules.

So what’s driving that £58bn projected increase in borrowing?...3/

Read 18 tweets

Ben Chu

@BenChu_

Nov 11

The media is awash with talk of a “fiscal hole” that needs to be filled with tax rises/spending cuts in next week's #AutumnStatement.

But what is this "fiscal hole" & how worried should we be about it?

A thread... 🧵1/

...The first thing to stress is that it’s NOT some kind of hard financial limit on government spending or borrowing, which, if breached, means disastrous things automatically happen...2/

...Rather, it’s a measure of how far off course the government is from meeting its own fiscal rules, the main plank of which has been to have the national debt falling as a share of the overall economy in three years' time, implying the financial year 2025-26...3/

Read 22 tweets

Ben Chu

@BenChu_

Nov 8

What does the latest data suggest about the impact of Brexit on UK trade?

🇬🇧🇪🇺🚛🛳️💵📉

Brief chart 🧵...

...The raw goods export data from the Office for National Statisics *suggests* a recovery.

After a sharp fall after the UK left the single market, volumes of exports and imports from the EU are now back *above* where they were before...

...And goods exports to the EU have actually grown by more than our exports to the rest of the world...

Read 8 tweets

Ben Chu

@BenChu_

Oct 28

UPDATE on #AutumnStatement

No final decisions yet taken but #Newsnight understands it will likely...

- Target debt falling as share of GDP in 5 years' time (not 3 years, as per existing rule)...

...

- Cuts to departmental spending likely to be pencilled in for *after* the current Spending Review period ends in 2024/25 - though no compensation for departments for higher inflation *in* Spending Review period so de facto real terms cuts...

...

- Despite backdating of spending cuts, will still be significant fiscal consolidation in next 2 years aswell

- Real terms cuts to benefits not ruled out, ditto suspension of triple lock

- Capital spending cuts (infrastructure) still in play...

Read 4 tweets

Ben Chu

@BenChu_

Oct 15

"I don’t think we’re talking about austerity in the way we had it in 2010" said the new chancellor Jeremy Hunt this morning.

Is this right?

Brief thread 🧵1/

@OBR_UK

...Well, we obviously don't yet know what the fiscal hole projected by the @OBR_UK will be.

And we don't know if there will be *more* tax U-turns or *other* tax rises.

But if we take the @TheIFS estimates of the fiscal hole of around £60bn...2/

...subtract the roughly £20bn of tax cut reversals so far (and assume no further tax u-turns) and that implies a remaining hole of £40bn that would have to be filled by spending cuts, or around 1.5% of GDP...3/

Read 6 tweets