In contrast to the previous chancellor, Philip Hammond has ditched grandiose announcements and made some specific investment proposals that could make a real difference
Today’s Autumn Statement was notable for its change in purpose from the previous chancellor. In recent times, the focus was on eradicating the deficit which was originally scheduled to happen in 2015, and then 2019. It has now been postponed to an unspecified date in the next parliament. By next year, the chancellor Philip Hammond might want to drop any reference to it altogether.
That does not mean that any kind of state largesse should be expected after today’s statement. It was still delivered in a very sober way and, in truth, the resilience of the UK’s economy since the Brexit vote has brought some wriggle room in the short term.
There was a notable shift away from grandiose announcements such as the northern powerhouse to specific policies, which is to be welcomed
Growth forecasts for 2016 increased but from 2017 revisions were down rather than up, making next year’s statement a daunting task.
For today, however, there was a notable shift away from grandiose announcements such as the northern powerhouse to specific policies, which is to be welcomed.
For construction in particular there were some interesting announcements. First, the overall level of capital investment is going to rise over the next four years from £79bn to £106.3bn 2012-2022, which is to be welcomed.
Secondly, there were a number of spending proposals aimed at particular sectors of construction, which could potentially boost output levels in the near term. In particular the announcement on road spending is welcome since the last time this was announced in 2014 a sharp increase in output was recorded in subsequent months. I would expect that to happen again.
The housing infrastructure announcement, depending on the details, could have a similar positive impact.
However, the scale of the challenge in infrastructure and housing should not be underestimated. Infrastructure contracts are more than 40% lower than last year at present so while a shot in the arm is welcome, a sustained level of spending is required.
Michael Dall is an economist at Barbour ABI