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OBR: Eight years of living standards growth wiped out in 7% fall
As Hunt sat down, the Office for Budget Responsibility released its latest economic and fiscal outlook.
It’s grim.
The OBR says that despite the new support with energy bills, living standards are going to fall by 7% over the next two years.
That’s a dire outcome, wiping out eight years of growth.
The OBR says:
Over £100bn of additional fiscal support over the next two years cushions the blow of higher energy prices – but the economy still falls into recession and living standards fall 7% over two years, wiping out eight years’ growth.
Over the medium term, around £40bn in tax rises and spending cuts – in roughly equal measure – offsets higher debt interest and welfare costs and gets debt falling as a share of GDP.
The fall in living standards next year will be the biggest on record, so since at least the mid-1950s, the OBR adds:
On a fiscal year basis, RHDI per person (a measure of living standards) falls by 4.3% in 2022-23, which would be the largest since ONS records began in 1956-57.
That is followed by the second largest fall in 2023-24 at 2.8%.
This would be only the third time since 1956-57 that RHDI per person has fallen for two consecutive fiscal years – the last time this happened was in the aftermath of the global financial crisis.
This chart shows the scale of the hit to living standards, as inflation hammers households.
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This will add £5.7bn to tax receipts next year, which would be a record cash increase, the budget watchdog says.
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It would be the first time that any government has raised fuel duty rates in cash terms since 1 January 2011.
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It is expected to raise the price of petrol and diesel by around 12p a litre, the OBR adds.
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Crikey !! This is from OBR documents.
Fuel duty hike not mentioned in the Chancellor's speech, funnily enough …. pic.twitter.com/HVsKAD2DaW
— Liam Halligan (@LiamHalligan) November 17, 2022
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The OBR has assumed a 12p-a-litre rise in fuel duty in March next year, raising £5.7bn. No mention from Jeremy Hunt today but feels like a very big battle to come
— Jason Groves (@JasonGroves1) November 17, 2022
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The government has confirmed that it will enact legislation to grant formal regulatory powers to a new regulator with a remit to crack down on the behaviour of tech firms including Google, Facebook and Apple.
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The Digital Markets Unit, which has been set up in shadow form within the Competition and Markets Authority pending the granting of official powers, could fine firms billions of pounds if they do not follow a code of conduct based on “fair trading, trust and transparency” when dealing with rivals and third parties.
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Delivering today’s autumn statement, Jeremy Hunt said:
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We will legislate to give the Digital Markets Unit new powers to challenge monopolies and increase the pressure to innovate.
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The DMU will enforce a code of conduct that includes, for example, assessing the terms on which digital publishers trade with the tech firms, such as the commercial terms around the republishing of “snippets” of content, to ensure they are fair to “prevent [them] from taking advantage of power and position”.
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Owen Meredith, the chief executive of the News Media Association, an industry body, said:
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By acting to give the DMU the teeth it needs to level the playing field between news publishers and the tech platforms, government has moved forward with its stated objective of placing journalism on a truly sustainable footing. As the main investor in trusted journalism in the UK, the news media sector has a vital role to play in our democratic society as we face up to the serious challenges ahead of us.
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Something good in the Autumn statement today – gov is bringing forward legislation to set up the Digital Markets Unit in @CMAgovUK with powers to punish anti-competitive tech firms operating in UK (they're investigating mobile ecosystem at the moment) https://t.co/jwABOU0uXs pic.twitter.com/ShVuwpP19a
— Bruce Lawson (@brucel) November 17, 2022
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Jason Furman, who chaired Barack Obama’s Council of Economic Advisers, says it’s an important step forward.
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The UK is taking an important step forward to advance digital competition, helping to foster innovation and expand consumer choice. Specifically, the Autumn Statement commits to putting forward legislation to empower the Digital Markets Unit.
Thrilled this is moving forward. pic.twitter.com/sPUzPmZzBW
— Jason Furman (@jasonfurman) November 17, 2022
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The average band D household in England faces paying an extra £250 in council tax by 2027-28, the Office for Budget Responsibility says.
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Councils are expected to lift council tax by 5%, now that the government has removed the requirement to hold a referendum.
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In his speech, Jeremy Hunt referred to “more council tax flexibilities” which he said would help boost funding for the social care sector.
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The Treasury estimating that 95% of councils will raise rates by the maximum amount.
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This is an increase from the current 3% levy, with the new total being comprised of 3% in general council tax and 2% for the adult social care precept.
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Treasury sources say 95% of councils are expected jack up council tax, making the most of the new ability to put it up by 5% without a referendum.
OBR says: £4.8bn a year hit by 2027-28, equivalent to increasing the average Band D bill by around £250 (11%) in that year.— Paul Waugh (@paulwaugh) November 17, 2022
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The OBR explains that this will rake in billions of pounds more:
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This reflects the decision to give councils in England increased flexibility to raise council tax bills without the need for a local referendum, which is expected to result in…
Read More: Autumn statement 2022 live: OBR says living standards to fall 7% as Hunt confirms
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