The Autumn Statement: A missed opportunity to bolster Brexit Britain

CfL Banner

The Autumn Statement contained some positive elements. It was pleasing to hear that the employment rate is at an all-time peak of 74.5% and that unemployment is at an 11-year low. We were happy to see the back of the “rabbit in the hat” political manoeuvres that Osborne was so keen on; every one shifting us leftwards and costing the taxpayer money. It can only be a good thing that the Autumn Statement is to be abolished. It was introduced to give the vainglorious Gordon Brown a platform for political posturing and George Osborne used it as an opportunity to buy off sections of the electorate.

Unfortunately, looming over the entire event is the UK National Debt which stands at a record high of 90.2% of GDP. Over six years George Osborne portrayed himself as austerity personified; the very picture of prudence. The reality is that the deficit got the better of him. The national debt was £1 trillion when he took office and £1.6 trillion when he left. Philip Hammond plans to raise this by £1.95 trillion. We at Conservatives for Liberty have long believed in the necessity of reducing the size and scope of the state, but instead of making difficult decisions about how to reduce spending, the Chancellor chose to rack up more debt. Our grandchildren will pay for it.

As for the Government’s response to Brexit? Weak.

In a remarkable time of our history, with the nation still  reflecting on the bold decision taken on June 23rd; this was an unremarkable Autumn Statement utterly lacking in boldness. Had this been a normal year, had the referendum never happened, then this “steady as she goes” statement may well have been what was called for. But this is not a normal year and the Chancellor should have begun implementing radical policies for Brexit Britain. Now the economy will be navigating through the choppy waters of the jittery markets well into 2017; the Chancellor should have opened the sails. We need the Government to be proactive, not reactive.

The inevitable uncertainty created by the anticipation of Article 50 being triggered, and the subsequent negotiation process, is likely to lead to a drop in private investment. This was a missed opportunity to introduce radical tax cuts to encourage investment and get British business booming. We are happy that the planned cuts in corporation tax are going ahead, but the rate is still too high; why not cut deeper? To encourage investment he should have slashed capital gains tax. Rather than tinkering with the housing market, he should have abolished stamp duty; it’s an abysmal tax that  reduces homeowner mobility and it’s a contributing factor to the housing crisis.

Imagine the excitement and the positivity that would be generated from brave policies such as these. The markets would respond positively to optimism in tone and confidence of action. Instead, we had no bold tax cuts or major tax reform; all we got was timidity. There was no vision or imagination.

The Chancellor’s cautiousness may be due to a belief that he needs to hold back for now, and play a stronger card later when it is most needed, but why wait? Why be reactive? It simply allows a sense of directionless and creeping negativity to dominate the economic narrative. This is not the time for pessimism; we should be reinvigorated and excited about our future.

Those among us who are buoyed by negative indicators and hoping for bad news will continue to try and shape the national narrative in a gloomy manner; the Government is allowing them to do so, to the detriment of all.

The OBR, the UK’s official economic forecaster, has released figures that have been pounced on by remainers as proof of the damage of the Brexit vote. The OBR, having so little to work with from the Government, has made a series of assumptions; that there will be lower productivity, reduced business investment and more barriers to trade. Based in these assumptions the OBR predicts an extra £59 billion in extra borrowing in the next five years will be directly related to the result of the referendum. Brexit detractors are now citing this as the real cost of the Leave vote and using it as ammunition in their quest to stop the whole thing in its tracks.

However, citing forecasts based on assumptions as if they were facts based on certainties is highly dubious.  Remainers with confirmation bias want the public to believe unquestioningly in the figures as the “true cost of Brexit” and to take every piece of bad economic news as directly and solely linked to the referendum, even when we are still clearly suffering from the legacy of the financial crash, and share many of the same problems, such as low wage growth, with much of the West.

Even if we run with the OBR’s pessimistic forecast; the economic impact is nothing like as severe as predicted pre-referendum. Britain will still be growing faster than the Eurozone and the British public will likely be wondering what on Earth all the fuss was about in a few years. The OBR forecasts GDP growth from 2017 to 2021 as follows:

  • 2017 – 1.4%
  • 2018 – 1.7%
  • 2019 – 2.1%
  • 2020 – 2.1%
  • 2021 – 2.0%

These figures are hardly disastrous. The OBR predicts growth will be back to normal after just two years; meaning the negative Brexit effect that the OBR expects will be short lived. It was a decision for the future, for the next 10, 20 to 50 years; in the long run we will be better off than otherwise would have been.

Looking ahead, Brexit will make the British economy more competitive, more dynamic and more open. We should’ve started as we mean to go on. Philip Hammond should have sent a clear signal to the the world about Britain’s exciting direction of travel. By taking the first steps to building a dynamic, free market Britain – preparing to exploit the benefits of its freedom – the Chancellor could have lifted the mood of the nation.

With the Conservatives facing so little resistance; we cannot afford to keep spurning these opportunities. We want a Conservative government that envisions a fairer country based on lower taxes and rediscovers its instinct for frugality. Above all else, we want a Conservative government that inspires a sense of national pride and optimism and embraces our path to national independence.