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A quick look at Phillip Hammond’s UK Autumn Statement

Last updated: May 3rd, 2017 at 09:55 pm

UK Chancellor of the Exchequor Phillip Hammond (ie. the UK finance minister) has announced his Autumn Statement in which he lays out growth and borrowing expectations, a few spending plans and taxation changes. Below is a brief breakdown and a few comments.

Phillip Hammond


  • The commitment to have a budget surplus “as soon as practicable” is somewhat ambiguous and leaves it wide open to be extended.
  • Brexit will have knocked off 2.4% from GDP over the next five years according to the Office for Budget Responsibility.



  • Corporation tax to 17% as planned from 20% (remember Trump wants to cut US from 30% to 15%)
  • Personal Allowance increasing to £12,500 by the end of Parliament
  • Higher rate tax threshold to £50,000 by end of Parliament
  • £2bn planned to be raised from targeting tax avoidance.
  • Insurance premium tax increase from 10% to 12%



Weaker growth and weaker tax revenues means more borrowing.

Still in the red at the end of this Parliament,which is a change from George Osborne’s balanced budget target.

Borrowing is back, and more fiscal spending is replacing a far more austere approach of the Cameron/Osborne regime.

  • Around £110bn of extra borrowing at the end of the Parliament.
  • Instead of being a budget surplus by end of 2020, it will still be £22bn in deficit.
  • Borrowing less than 2% of GDP by the end of the Parliament.



  • Forecast of 2.1% for 2016.
  • Falls to 1.4% in 2017 and 1.7% in 2018
  • Before returning to trend around 2% in 2019.

This is still quite optimistic for the OBR.

Dropped for the next two years but importantly kept the same from 2019 onwards.



  • National debt rises to a peak of 90.2 by 2017/18

New target for debt to be falling as a share of GDP by the end of the Parliament.

However economists argue that as long as growth is positive, having debt falling as a proportion of debt/GDP is a sustainable position to be in.

National Debt

Household Budgets

  • National Living Wage improve to £7.50 next April (from £7.20)
  • Fuel duty rise cancelled
  • Upfront estate agency letting fees banned in England – not great for agents (note: Foxtons share priceis now 15% lower after this announcement)



  • £1.4bn help to build 40,000 NEW affordable housing.
  • £2.3bn Housing Infrastructure Fund to build 100,000 new homes in areas of high demand.



  • £1.3bn to improve local transport networks
  • £450m trial of digital signalling on railways
  • £390m for low-emission railways



A new “market leading investment product” from the NS&I A

  • 2% interest
  • for up to £3000 saved



  • New £6.7bn package to reduce business rates
  • £23bn for new National Productivity Investment Fund over 5 years (£4.6bn per year)
  • £1bn for digital infrastructure INCLUDING 3G MOBILE
  • Infrastructure investment to rise to between 1% to 1.2% of GDP from 2020 (this is still quite low compared to US, Canada, Japan and much lower than China)


One Budget per year is positive

Gives better certainty, less tinkering, and less politicising.

Also the timing of the Autumn Budget means more time to plan for the new tax year in April – better for businesses.



The initial market impact has been somewhat neutral (which is possibly quite positive given the renewed dollar strength today). However the general reaction could be considered to be mildly negative due to the increase in debt and borrowing, although this was largely expected.

  • The increase in borrowing of £122bn (through to 2021) is sterling negative
  • The expected rise to 90% debt to GDP is negative
  • However the OBR’s growth forecasts are more optimistic than feared.

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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.