If there is one figure to bear in mind amid a sea of epically bad numbers in today’s Autumn Statement and accompanying Office for Budget Responsibility (OBR) fiscal outlook, it is this: underlying public sector net debt will be £400bn (18% of GDP) higher in 2026-27 than was forecast in March.
When it comes to economic indicators, I normally prefer to talk about things that directly impact people. GDP growth is all well and good, but it only matters insofar as it makes us richer. And there’s plenty of galling news on that front too: living standards are projected to fall by a record 7% in the next two years, wiping out a decade’s worth of (albeit rubbish) gains.
But today’s Autumn Statement isn’t really about inflation or real-terms wage cuts. It has come about because the gap between what the government collects in revenue, and what it spends on public services and debt interest, has grown too large.
In 2006-07, the UK’s debt to GDP ratio stood at 42.5%. In 2025-26, it is set to hit 98%. What happened? The reality is the British economy has suffered three unrelated economic shocks in the last 15 years. First was the global financial crisis, then Covid-19, and now an energy price explosion linked to Russia’s invasion of Ukraine. Brexit has hardly helped matters, by hitting trade and reducing the productive capacity of the economy.
Much of today’s events flow from this uncomfortable reality. Despite the briefing, this isn’t Osbornomics 2.0. Not only because the ratio of spending cuts to tax rises is markedly different, but because much of the cuts are pencilled in from 2025. This makes not only political sense, but economic too, given the recession.
So this is George Osborne’s rhetoric without the immediate spending cuts, in the hope that something will come along after the next election (perhaps we’ll find the world’s largest reserves of precious metals under an unpopulated part of England which also somehow has good transport links and under-subscribed schools) to render them unnecessary.
I can hear the think pieces already. ‘Why this is a challenge for Labour’. And sure, it will be a headache for whoever forms the next government. But this too eagerly overlooks just how painful the next two years will prove. See energy bills rising to £3,000 for the average household. Or income tax thresholds. Or inflation. Or mortgages/rents. Keir Starmer may or may not have a shiny alternative, but ‘I didn’t do it’ alone may prove a pretty persuasive argument.
The British economy has had a disastrous decade and a half. Some of it is the result of our choices, others what insurance companies used to call acts of god. But unless and until we choose to do things that will sustainably grow the economy – boost migration, reform planning laws, negotiate a better deal with the EU – the future will involve more painful choices. And that is before the fourth economic shock we are surely due.
In the comment pages, Business Editor Jonathan Prynn, shows how falling real incomes – a curse for most retailers – are a boon for the likes of Lidl and its German rival Aldi.
Chief Theatre Critic Nick Curtis says let’s be out and proud to be woke — it’s just the modern term for manners. While Martin Robinson goes full Martin Lewis and suggests the only way through Christmas gift hell is pre-nups.
And finally, after all that misery, from blockbuster art shows to glam ice skating, team ES brings you 21 ways to spark joy on this Autumn Statement day.
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