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Economy, public finances, taxes: ICAEW responds to Autumn Statement

Author: ICAEW

Published: 17 Nov 2022

Commenting on the economy, Suren Thiru, ICAEW Economics Director, said:

“Today’s statement further highlighted the scale of the challenge facing the country as we enter recession, with rising unemployment and falling business investment posing a real threat to our long-term economic recovery.

“The business rates relief package will help many struggling firms, who are feeling the brunt of soaring inflation. With energy bills set to rise sharply next year, a lack of clarity over continued financial support for businesses after April will result in more uncertainty and diminish confidence further, adding to the downward pressure on business activity and investment.

“Rising inflation, interest rates and energy bills are clobbering people’s incomes, which are set to fall by more than 7% over the next two years. This is the biggest fall on record, and could mean this downturn is even more damaging than the OBR predicts.” 

Commenting on the tax measures announced, Frank Haskew, Head of Taxation Strategy at ICAEW, said:

“The tax measures announced today will bring more people into higher tax bands and add more complexity to the system for many taxpayers.

“The most obvious change - the reduction in the threshold for the highest earners - will bring more people into higher rates of income tax over the next five years, but frozen allowances and bands, the reduction in the dividend allowance and capital gains exemptions will also lead to taxation by stealth.

“Many taxpayers will find their tax become more complex and this will be more difficult for HMRC to administer at a time when its services are under considerable pressure.”

Commenting on the public sector, Alison Ring, ICAEW Director for the Public Sector, said:

“The Chancellor is right that strong public finances should make accountants happy. Unfortunately, the public finances continue to weaken, with the measures announced in the Autumn Statement only able to plug some of the shortfall between receipts and public spending that has opened up as the economy enters recession.

“While the Chancellor has met his objective of seeing the underlying debt to GDP ratio peak in 2027, he has had to abandon the government’s fiscal rule that targets a current budget surplus. This is a further retrenchment from former Chancellor George Osborne’s plan to completely eliminate the overall deficit by 2016 and highlights the lack of resilience in the public finances following a series of economic shocks over the past 15 years.

“With fiscal drag on both tax receipts and public spending being used to do a lot of the heavy lifting, and a number of reviews launched today, the likelihood is that further measures should be expected in the Spring Budget to further stabilise the public finances.”


Notes to editors:

CONTACT: ICAEW media office, tom.mackintosh@icaew.com or 07866 853841