Autumn Statement 2016: What do strong GDP figures mean for Philip Hammond's first spending spree?

 
Jake Cordell
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Philip Hammond stands in front of Number 11 Downing Street
Philip Hammond delivers his first Autumn Statement on 23 November (Source: Getty)

Next month's Autumn Statement may not be the mighty spending spree some had expected, as today's expectation-beating GDP figures could prompt a rethink inside the Treasury about how far they need to go.

Chancellor Philip Hammond has promised a fiscal reset, although growth of 0.5 per cent in the third quarter is significantly up on economists' forecasts and - combined with worse-than-expected government borrowing levels - could lead to a more nuanced package of stimulus measures on 23 November.

Nevertheless, with inflation also set to jump over the next 12 months, the Bank of England may be running out of options, meaning business groups and economists are still looking to Hammond to provide some support to the economy as the UK prepares to navigate up to two years of uncertainty.

The team at investors AJ Bell said: "Whether monetary policy alone will be enough remains to be seen and chancellor Hammond may decide to back that up with a bout of fiscal stimulus in the Autumn Statement next month."

Read more: Should Philip Hammond have called an early Autumn Statement?

However, Barclays believes both a second post-referendum interest rate cut and any big spending from the chancellor will "most likely be delayed to the first half of next year".

But that hasn't stopped business lobbies the British Chambers of Commerce (BCC) and CBI issue calls for support.

Rain Newton-Smith at the CBI said: "The government will need to set out an ambitious, pro-enterprise agenda in next month’s Autumn statement which will get firms investing now and lift productivity in the future across all UK regions."

The BCC called for Hammond to "expand the scope of investment allowances, bring forward changes to local taxation and increase spend on trade promotion". The group also wants a big infrastructure drive and has dismissed the idea of a headline-grabbing cut to corporation tax.

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