Although the boost (£5 billion, or 0.3 per cent of GDP) to public investment is welcome, there is nothing in the Autumn Statement which will make a significant difference to growth or employment in the short term. Moreover, it is highly unfortunate that the money has been found by overriding the automatic stabilisers, which previously were working well in preventing a worse downturn. For the foreseeable future, the OBR forecasts that output will continue to be well below trend, and unemployment will remain correspondingly higher than necessary. Much more ambitious action was called for.
Over the medium term, the key point is that, with the abandonment of the debt target, the fiscal mandate is no longer coherent (as I argued here); there is no longer any rationale for any particular pace of deficit reduction. It would have been sensible for the government to consult on a replacement.
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