George Osborne's Autumn Statement: 10 things to look out for

Including, when will living standards start to rise, will there be new money for the NHS and how much more austerity is Osborne planning?

George Osborne will deliver his Autumn Statement at 11:15am today but, as so often with these events, it feels as if much of it has already been announced. The imposition of capital gains tax on foreign property owners, the freeze in business rates, the scheduled rise in the state pension age to 70 (in the 2060s) and the scrapping of employers' National Insurance for workers under 21 have all been pre-briefed to the media. 

One reason for this is that Osborne wants as much attention as possible to be focused on the OBR's improved forecasts for growth, employment and borrowing. Having responded to Labour's cost-of-living offensive by reducing green levies on energy customers, his other main aim is to shift the debate back towards the deficit and austerity, issues on which the Tories continue to out-poll Miliband's party. This being Osborne, he'll also have held at least one headline announcement back to triumphantly flourish at the end of the speech. And there's much more to look out for too

1. When will living standards start to rise? And by how much?

At present, while the economy is growing at its fastest rate for six years (and faster than any other G7 country), real wages, as Labour relentlessly points out, are still in decline, with earnings growth of just 0.8% in the most recent quarter compared to inflation of 2.2%. The Treasury's hope and expectation is that this will begin to change next year. How strong the OBR expects earnings growth to be will do much to determine the extent of any pre-election feelgood factor. 

2. More money for the NHS?

With ministers suffering sleepless nights at the prospect of a winter A&E crisis, one persistent rumour in Wesminster is that Osborne will announce additional money for the NHS. As well as helping to prevent the health service from collapse, this would offer the Chancellor a chance to reaffirm his party's commitment to the NHS and to (falsely) allege that Labour would be cutting it. 

3. How big is the output gap? (How much more austerity is needed?) 

One wonkish measure worth keeping an eye on is the output gap: the difference between actual and potential growth. The size of this will determine how much more austerity will be required to eliminate the structural deficit (the part of the deficit that exists regardless of the level of economic output) in the next parliament. 

4. Benefit cuts for under-25s

At every Budget and Autumn Statement he delivers, Osborne always finds a way to put welfare centre stage and today is likely to be no exception. One issue on which the Chancellor is expected to give more details is the coalition's plan to remove benefits from under-25s who are not "earning or learning". 

5. What's happening to income tax threshold?

Having already announced that the coalition's pledge to raise the personal allowance to £10,000 will be met by next April, there's room for Osborne to go further. Nick Clegg has urged him to raise it to at least £10,500, while David Cameron is said to be eyeing a £10,750 threshold. Osborne may well choose to keep his powder dry until the Budget but look out for a hint of further action today. 

6. When will a budget surplus be achieved?

The most significant announcement in Osborne's Conservative conference speech was his pledge to run a budget surplus by the end of the next parliament. With the OBR's updated forecasts, we'll find out when this might be achieved (today's FT suggests 2018-19). Expect Osborne to use this as his essential test of whether Labour is prepared to be fiscally responsible and as a signal of when greater tax cuts may become possible. 

7. Will Osborne halve the deficit by the election? 

Despite borrowing billions more than expected, Osborne is fond of reminding us that the deficit has still fallen by a third since the general election (from £159bn in 2009-10 to £115bn in 2012-13). If the numbers fall right today, he may well boast that he'll have halved it by the time of the general election (the Darling plan, in other words). 

8. Another cut in corporation tax?

Osborne has used almost every one of his Budgets and Autumn Statements to announce that he'll be cutting corporation tax by even more than expected (it is currently due to fall to 20% in 2015-16 from its 2010 level of 28%, giving the UK the joint-lowest rate in the G20). Today he'll publish new Treasury research showing that, in the next 20 years, the cuts are forecast to add around 0.7% to GDP (merely suggesting, as Richard Murphy puts it, that Osborne has finally discovered the multiplier), so it would be unsurprising if he chose to combine this with an annoucement that the rate will fall even further - to 19%. 

9. More public sector job losses?

As well as publishing new forecasts for growth, inflation and borrowing, the OBR will release its new estimate of how many public sector jobs will be lost over the course of the austerity programme. In the most recent Budget, this figure was put at 1.2 million but with Osborne planning further spending cuts to pay for tax cuts and benefit increases (free school meals), it could rise today. 

10. A cut in fuel duty?

The Chancellor has already vowed to freeze fuel duty for the remainder of this parliament but with the improvement in the public finances will he go further and deliver an outright cut? If Osborne is looking for a headline announcement designed to show that the government is not indifferent to the "cost-of-living crisis" this is the most likely candidate. 

George Osborne inspects material during a visit to AW Hainsworth and Sons on October 25, 2013 in Leeds. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Theresa May’s Brexit speech is Angela Merkel’s victory – here’s why

The Germans coined the word “merkeln to describe their Chancellor’s approach to negotiations. 

It is a measure of Britain’s weak position that Theresa May accepts Angela Merkel’s ultimatum even before the Brexit negotiations have formally started

The British Prime Minister blinked first when she presented her plan for Brexit Tuesday morning. After months of repeating the tautological mantra that “Brexit means Brexit”, she finally specified her position when she essentially proposed that Britain should leave the internal market for goods, services and people, which had been so championed by Margaret Thatcher in the 1980s. 

By accepting that the “UK will be outside” and that there can be “no half-way house”, Theresa May has essentially caved in before the negotiations have begun.

At her meeting with May in July last year, the German Chancellor stated her ultimatum that there could be no “Rosinenpickerei” – the German equivalent of cherry picking. Merkel stated that Britain was not free to choose. That is still her position.

Back then, May was still battling for access to the internal market. It is a measure of how much her position has weakened that the Prime Minister has been forced to accept that Britain will have to leave the single market.

For those who have followed Merkel in her eleven years as German Kanzlerin there is sense of déjà vu about all this.  In negotiations over the Greek debt in 2011 and in 2015, as well as in her negotiations with German banks, in the wake of the global clash in 2008, Merkel played a waiting game; she let others reveal their hands first. The Germans even coined the word "merkeln", to describe the Chancellor’s favoured approach to negotiations.

Unlike other politicians, Frau Merkel is known for her careful analysis, behind-the-scene diplomacy and her determination to pursue German interests. All these are evident in the Brexit negotiations even before they have started.

Much has been made of US President-Elect Donald Trump’s offer to do a trade deal with Britain “very quickly” (as well as bad-mouthing Merkel). In the greater scheme of things, such a deal – should it come – will amount to very little. The UK’s exports to the EU were valued at £223.3bn in 2015 – roughly five times as much as our exports to the United States. 

But more importantly, Britain’s main export is services. It constitutes 79 per cent of the economy, according to the Office of National Statistics. Without access to the single market for services, and without free movement of skilled workers, the financial sector will have a strong incentive to move to the European mainland.

This is Germany’s gain. There is a general consensus that many banks are ready to move if Britain quits the single market, and Frankfurt is an obvious destination.

In an election year, this is welcome news for Merkel. That the British Prime Minister voluntarily gives up the access to the internal market is a boon for the German Chancellor and solves several of her problems. 

May’s acceptance that Britain will not be in the single market shows that no country is able to secure a better deal outside the EU. This will deter other countries from following the UK’s example. 

Moreover, securing a deal that will make Frankfurt the financial centre in Europe will give Merkel a political boost, and will take focus away from other issues such as immigration.

Despite the rise of the far-right Alternative für Deutschland party, the largely proportional electoral system in Germany will all but guarantee that the current coalition government continues after the elections to the Bundestag in September.

Before the referendum in June last year, Brexiteers published a poster with the mildly xenophobic message "Halt ze German advance". By essentially caving in to Merkel’s demands before these have been expressly stated, Mrs May will strengthen Germany at Britain’s expense. 

Perhaps, the German word schadenfreude comes to mind?

Matthew Qvortrup is author of the book Angela Merkel: Europe’s Most Influential Leader published by Duckworth, and professor of applied political science at Coventry University.