Chancellor Jeremy Hunt delivered his autumn statement today aiming to achieve two difficult tasks – restoring credibility in the financial markets and trying to ensure that the forthcoming recession is not made longer and deeper than expected. The Office for Budget Responsibility (OBR) helped somewhat, suggesting a different economic outlook than the Bank of England. The OBR’s view is that the economy will decline in 2023 by 1.4% before returning to growth in 2024. The Bank of England’s view is that the recession lasts into 2024. Had OBR accepted this view, the chancellor’s job would have been even more difficult. As it was, he was afforded a little more wiggle room (but not much), and secured some more with a change to the fiscal rules. Essentially, while he has back loaded the consolidation of public finances to after the next election, there was still a lot of economic pain to endure.
Inflation’s grip on the economy continues to harm living standards, with the OBR suggesting a 7% fall in living standards over the next two years. This will wipe out the last eight years of progress. Locally, the announcement of £650m in Barnett consequentials over the next two years is welcome but the concern remains over how the current deficit in NI’s budget - £650m this year alone – will be handled and how increasing demand’s in NI’s budget pot will be met.