Autumn Statement 2022: A summary

The Chancellor of the Exchequer, Jeremy Hunt, gave his 2022 Autumn Statement  to Parliament on 17 November and published documents with further details. Once the Chancellor finished his statement, the Office for Budget Responsibility (OBR) published updated forecasts in its economic and fiscal outlook.

As the Library briefing Background to Autumn Statement 2022 explains, the Autumn Statement followed a turbulent time in UK politics. Significant tax cuts were announced in mid-September which were largely reversed by mid-October. There have been three Chancellors since August 2022 and three Prime Ministers. The Prime Minister, Rishi Sunak, says the UK’s international reputation has taken “a bit of a knock” recently.

The OBR forecasts

The Autumn Statement was delivered in the context of weak economic growth, high inflation, and rising interest rates. The OBR forecast that the UK has been in recession since Q3 which will last for just over a year to Q3 2023, with GDP falling by 2.1% over that time.

Economic output (measured by GDP) will not return to its pre-pandemic level until Q4 2024, according to the OBR’s forecast.

Household budgets are being squeezed by rising inflation which reached 11.1% in October 2022, the highest rate since October 1981.

The OBR forecasts that high inflation will lead to average living standards – as measured by after-tax real incomes per person – falling by 7% in total over this year and next. This is despite £100 billion of Government support going to households. Living standards on this same measure will still be 1% below the pre-pandemic level in early 2028 (the end point of the OBR’s forecasts).

As inflation subsides and real incomes grow again, the economy begins to expand again in 2024, with GDP growth of over 2% forecast in 2025, 2026 and 2027.

The difficult economic outlook is behind many of the decisions taken by the Chancellor. In terms of policy, the Chancellor’s focussed on showing that, despite the weaker economic outlook, Government plans for the public finances are credible. He said that “credibility cannot be taken for granted”.

Targets for government borrowing and debt

The Chancellor proposed new targets for government borrowing and debt, which currently focus on 2027/28. There targets have been met in the forecast through a combination of spending reductions and tax increases.

Taken together, the measures announced by the Chancellor reduce government borrowing in each year from 2024/25.

In 2027/28, through a combination reduced spending (£30 billion) and tax increases (£25 billion), government borrowing is lowered by £55 billion.

The full document discusses the outlook for public spending, tax and spending policy announcements and discusses the OBR’s forecasts for the economy and the public finances. 

Autumn Statement 2022: Reaction provides links to analysis of, and reaction to, Autumn Statement 2022, from selected think tanks, business groups, political parties and other organisations.