Autumn Statement 2014: Background briefing

The 2014 Autumn Statement comes at a time when the UK economy is experiencing strong growth – the fastest of the G7 economies in 2014 – and a historically high employment level of 30.79 million, with an employment rate back at its pre-recession peak.

Despite the strong labour market, pay growth remains slow and lags behind inflation. However, threats to economic growth largely come from abroad, and in particular the Eurozone where growth is sluggish, unemployment persistent, and deflation a very real risk.

Government borrowing has fallen by over £50 billion since 2009/10 to £98 billion in 2013/14. A further decrease of £11 billion in 2014/15 was forecasted by the OBR in March, but data so far this year have not been promising: borrowing is up 6.1% on the same period in 2013/14. The OBR looks set to decrease its forecast for receipts following weaker than expected performance in the year so far.

An updated Charter for Budget Responsibility will be published alongside the Autumn Statement. Media reports suggest that it will include a target to eliminate the cyclically-adjusted current budget by 2017/18. This measure of the deficit is adjusted for the economic cycle and excludes spending on investment. The current fiscal mandate is for the cyclically-adjusted current budget to be achieved by the end of a rolling five year period.

In his statement to the House the Chancellor is expected to announce the Government’s decision on whether to devolve corporation tax powers to the Northern Ireland Assembly.