Reactions to the chancellor’s statement

THE BUSINESS GROUP
Director general of the CBI
John Cridland

The CBI had lobbied the government to cap business rates at two per cent and support business finance.

“We have always advocated the dual approach of tackling the deficit and driving growth – the OBR forecasts confirm it is working. Let’s stick with what works.

“The pressure on the high street has been recognised; the two per cent cap on business rates and discount for very small businesses are positive, as is the reoccupation relief.

“Abolishing a jobs tax on employing young people under 21 will make a real difference and help tackle the scourge of youth unemployment.

“But it was a missed opportunity not to support our hard-pressed energy intensive businesses which are also struggling with rising costs, and the package on housing supply could have been more ambitious.”

THE PENSIONS BOSS
CEO of Zurich UK Life
Gary Shaughnessy

Zurich UK Life offers pensions, savings and life insurance.

“This is a sign of things to come and Britain needs to make saving for retirement more of a priority if it is to face the challenges of increasing longevity.

“Living longer means people will have to save more and work longer to be able to fund old age. It is important that people take responsibility and start planning for retirement from an early age.

“Our pensions system has undergone many changes in recent years, which has brought a lot of uncertainty around retirement saving. We now need stability if people are to have confidence in pensions. The government should now focus on the support that people need in old age, particularly in the area of long-term care.”

THE CITY ECONOMIST
Chief economist, Hermes Fund Managers
Neil Williams

Williams thinks the chancellor was right to avoid big giveaways.

“This is a much warmer Autumn Statement than the chancellor expected a year ago. With the UK’s ‘sugar rush’ recovery underway, conventional gilts and equities should welcome the upgrade to growth projections and the fact that Osborne is keeping budget consolidation ahead of fiscally ‘expensive’ give-aways. The only slightly smaller, £2bn drop in gilts issuance plans, though, will disappoint some.

“Fiscal conditions should remain tight, with Osborne aiming to whittle down the underlying budget deficit, and ultimately return it to the black in 2018-19.

“With the ‘devil in the detail’, there’s always a risk that a euro-zone relapse exposes the OBR’s optimistic revenue projections.”

THE CHAMBER OF COMMERCE
Director general, British Chambers of Commerce
John Longworth

The BCC had also called for business rate cuts to aid its members.

The chancellor has in large part heeded business’s call for a steady Autumn Statement, rather than a grab bag of electoral giveaways. While Britain’s economy is improving, and our businesses report strong confidence, the UK is still some way from achieving the truly great economy we need. Business will be pleased that the chancellor has finally acted on business rates bills after years of relentless increases that sucked the life out of businesses in all parts of the UK. The measures announced to curb business rate increases are positive, but not strong enough to boost companies’ cash flow and investment. The chancellor should have been bolder, freezing business rates entirely until this pernicious tax can be properly reformed.

THE OPPOSITION’S RESPONSE
Shadow chancellor
Ed Balls

Yesterday marked Ed Balls’ third Autumn Statement as Labour’s shadow chancellor. His speech in parliament included the following:

“The whole country will have seen today that, for all his boasts and utterly breathtaking complacency, the chancellor is in complete denial about the central fact which is defining this government’s time in office. That under this chancellor and this Prime Minister, for most people in our country, living standards are not rising, they are falling year on year.

“[L]et me ask the chancellor about the promises he made to this House on growth and living standards three years ago. He said then that the economy would grow by more than 8.4 per cent by the end of this year.

But even after today's welcome upward revisions, growth is set to be half of that.

“Didn’t the chancellor pledge to get the banks lending – but net lending to businesses is now over £100bn lower than in May 2010?

Didn’t he make the number one test of his economic credibility keeping the AAA credit rating – but it has been downgraded, not once but twice?

“And as for his promise to balance the books by 2015, didn’t he confirm today that, in 2015, he is not balancing the books, he is borrowing £79bn? For all his smoke and mirrors he is borrowing £198bn more than he planned in 2010.

“We have a chancellor who will stand up for the energy companies, they’ll stand up for the hedge funds, they’ll stand up for people earning over £150,000 – who get a tax cut. But they won’t stand up for the millions of families and pensioners in our country, people struggling with rising energy bills, falling wages and higher childcare costs.

“With housebuilding under this government at its lowest level since the 1920s, doesn’t he see: his Help to Buy scheme to boost mortgage demand can only deliver a strong and balanced recovery if – as we and the IMF have urged – he matches it with more supply by building more affordable homes?

“This complacent chancellor sits there and thinks he deserves a pat on the back. I have to say, with bank bonuses rising again and millionaires enjoying a big tax cut, this is a policy which is working for a few.”

THE DIRECTOR’S TAKE
Director general, Institute of Directors
Simon Walker

The IoD had called on the chancellor before the Autumn Statement to consider cutting capital gains tax, freeze business rates and axe 45 per cent income tax.

“The government is right to recognise that while significant headwinds remain in the Eurozone, and, to a lesser extent, in America, the most exciting economic opportunities are to be found in Asia.

“We welcome the additional support for exporters, but it remains the case that the most effective way to increase Britain’s international trade is to make it easier to do business at home.

“Whilst the announcements on Employers’ National Insurance contributions and business rates will go some way to achieving this, burdens on key export sectors should always be under review.”

THE TRADE UNION’S VIEW
General secretary
Frances O’Grady

The Trades Union Congress reacted angrily to the changes to the state pension age and reforms to work and benefits for young people.

“Almost a million young people are currently looking for work and will have been hoping for much more than the Chancellor offered them today.

“While it’s good news that employers are to be encouraged to provide more apprenticeships and that they won’t have to pay national insurance contributions for some young people in the future, effective and immediate action is needed to tackle the youth unemployment crisis.

“Unfortunately all the government has to offer is new measures to make young people work for free, when what is really needed is a job guarantee.

“Youngsters will understandably feel that they have been given a raw deal by the government. Not only are they to be forced into working for free once they’ve failed to secure a job after six months, but their working lives are to be dramatically extended too.

“Changes announced to state pension age mean that young people living in the least affluent parts of the UK will quite simply be working until they drop.”

Meanwhile, the GMB union called for the government to act on wage increases to offset the rising cost of living. “Wage rises above inflation for both public and private sector workers is the only way we can have a recovery shared by all,” said general secretary Paul Kenny in a statement.

THE PROPERTY EXPERT
Real estate tax director at PwC
Paul Emery

PwC’s property tax head on the capital gains tax being extended to non-residents who own residential property.

“This will be seen by non-resident individuals as a broken promise. They were strongly encouraged by the government to take their properties out of companies so that a future sale of bricks and mortar is subject to stamp duty. The quid pro quo was that they would not be subject to the annual charge or capital gains tax. Whilst UK property will remain an attractive asset class for investors, the government should not underestimate the impact on confidence in the real estate fund/investor community.

THE VIEW FROM THE OIL RIGS
Chief executive, Oil & Gas UK
Malcolm Webb

The industry body is cautiously optimistic.

Oil & Gas UK supports fiscal plans to encourage exploration and development of the UK Continental Shelf, which will ensure the sector remains an attractive and competitive destination for investment and a driving force in the British economy. It is encouraging to know the government is committed to maximising economic oil and gas production offshore, and shares our welcome for the interim findings of Sir Ian Wood’s review. With up to an estimated 24bn barrels still to be recovered there is a strong future for the North Sea, but as a mature basin, this will require, amongst other measures, an encouraging fiscal regime if the recovery of our oil and gas resource is to be maximised.”

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