Reaction: UK finance minister Hunt’s autumn statement

Jeremy Hunt

UK finance minister Jeremy Hunt has cut national insurance payments for about 27 million people in his autumn statement ahead of a general election expected next year.

The two percentage point reduction in the main rate of national insurance will save a person earning £35,000 more than £450.

The UK Chancellor also confirmed that a tax break allowing companies to cut their tax bills if they invest in new equipment will be made permanent in what he claimed would be the “biggest business tax cut in modern history.”

Meanwhile, the UK’s Office for Budget Responsibility (OBR) has upgraded its growth forecast for UK gross domestic product this year, but downgraded the figure for subsequent years.

Hunt also confirmed the triple-lock formula for UK state pension rises would be implemented as usual — meaning the pension will rise by 8.5% in line with average earnings, worth up to £900 more a year.


James Lynch, fixed income manager at Aegon Asset Management, said: “Jeremy Hunt had a good starting position today, as higher tax receipts this year gave him the ability to save or spend – he chose to spend it.

“In the short term, the 2% cut to National Insurance starting in January 2024, and over the medium term making permanent the tax relief on investment are the two largest contributors, along with raising benefits by 6.7% and state pensions by 8.5%.

“One could argue the cut to tax should boost consumption and the tax relief for business should lead to higher investment in future years.

“In the grand scheme of UK budgets, this was a mild disappointment but not a disaster for the gilt market. The market was expecting somewhere around the £10bn to £15bn area in cuts to gilt issuance this year but only got £0.5bn taking total gilt sales to £237.3bn, due to the measure announced today. Treasury bills were however reduced by £10bn.

“Short term, the focus of the gilt market will be the extra auctions that were not expected, medium term it will be the economic fundamentals of GDP, inflation and BoE rates that will still be determining the level of gilt yields.”

Mark Littlewood, Director General at free market think tank the Institute of Economic Affairs “The Autumn statement is a step in the right direction towards lower taxes and economic growth, but not a leap.

“The introduction of permanent ‘full expensing’ will encourage businesses to invest in buildings, structures and equipment. The 110 supply side reforms, encompassing benefits, financial services and planning, will help boost growth. Cuts to national insurance return a substantial sum to the pockets of the average worker.

“Nonetheless, amidst the rhetoric about tax reductions, this government is presiding over one of the heaviest tax burdens in the past seven decades.

“The frozen income tax thresholds amount to a stealth tax increase of around £40 billion annually by some estimates. The Chancellor is essentially taking with one hand and giving back with another.

“There was also shockingly little about reducing government spending. The splashing of taxpayer cash for frivolous purposes, like on the Hay Festival, is hardly fiscally responsible.

“The rapid increase in the minimum wage risks businesses cutting jobs and hours of some of the most vulnerable workers, including those with less skills and the young.

“There is far more work to be done to reduce the tax burden, decrease spending, cut red tape, and reform public services.”

Jill Mackay, savings specialist at Scottish Friendly: “The Chancellor’s decision to allow people to pay into multiple ISAs of the same type each year will gives savers far more flexibility and choice over how they manage their money.

“Too often reforms to ISAs have focused on the interests of the wealthy and well-advised, but these latest changes will have universal benefit. There is potential from increased competition for higher rates on cash ISAs and lower fees charged by investment platforms.

“The ability to pay into multiple accounts in a single year is an open door to a more radical simplification of ISAs.

“This is a positive development in the evolution of ISAs and we hope that the planned consultation into wider reforms will lead to further sensible and well-thought through changes that have the everyday saver and investor front of mind.”

Jonathan Moyes, Head of Investment Research at Wealth Club: “The world’s most sophisticated investors, from endowment funds to sovereign wealth funds and family offices have long understood the benefits of investing in private markets as part of a diversified portfolio.

“With companies staying private for longer, much of the world’s growth and innovation is accruing in private hands. The decision to allow Long-Term Asset Funds within an ISA provides investors with the potential to gain exposure to this growth, in a tax efficient manner.

“The move also  promises to breathe new life into the ailing Innovative Finance ISA.

“Latest data shows a mere £144 million was invested into Innovative Finance ISAs in 2021/22, a shadow of its former self and just 0.2% of all ISA subscriptions. The drop in interest is understandable. Once associated with peer-to-peer loans, the innovative finance ISA has a short but chequered past.

“The inclusion of LTAFs should see the wrapper become a more compelling option for wealthy investors.”

Lindsay James, investment strategist at Quilter Investors: “In recent budgets and fiscal events, when consulted, the Office for Budget Responsibility has been far more optimistic about the trajectory of the UK economy and inflation than the Bank of England.

“On inflation, today that has changed and it is now beginning to mirror the thoughts of the Central Bank. In March the OBR predicted inflation would be 0.9% by the end of 2024, yet today that forecast now stands at 2.8%. Inflation is not expected to hit the 2% target until 2025, and thus rates will likely stay ‘higher for longer’ even as economic growth stutters.

“However, the OBR continues to be a more optimistic voice compared to others on economic growth in the UK. Having avoided a technical recession to date, the forecasts now indicate sluggish growth, down from estimates in March, but growth nonetheless.

“But that optimism isn’t translating into strong expectations – growth forecasts have gone from 4.1% between 2023 and 2025 in the spring, to 2.7% today as growth deteriorates compared to what was expected. It is clear that interest rates are weighing on the wider economy and making up for these periods of lost growth will be difficult for the UK despite the government’s best intentions.

“This was billed as an ‘Autumn Statement for growth’ and the government is attempting to give the economy a shot in the arm. But it is questionable how effective and long lasting this growth will be. Making the ‘full expensing’ tax break for business permanent is a good first step and should provide some certainty to some companies when it comes to their own investment decision making.

“But where the government provides certainty with one hand, they remove it with another and we will see a long-term freeze in investment spending, all the while awaiting details on a long-term industrial and green strategy, where Labour has somewhat stolen a march on the narrative.

“With an election likely to be less than 12 months away, this Autumn Statement is much more political in nature, particularly given the economic gloom has not yet lifted from the UK.

“The giveaways announced today are somewhat of a gamble by the government given the state of play with price rises and economic growth. Inflation is still running at more than double the Bank of England’s target it could be there is even less headroom for giveaways in the Spring.

“As a result, today’s decisions are being driven much more by the polls than any fundamental improvement in the state of the UK’s long-term finances.”

Vishal Chopra, Head of Tax for KPMG UK in Scotland: “Today’s Autumn Statement unveiled a series of modest announcements aimed at kickstarting economic growth, however, the effectiveness of these measures in collectively jumpstarting the economy remain to be seen.

“This statement serves as a warmup for a more attention-grabbing spring budget, which the Government will hope aligns with a steadily recovering economy and an impending General Election. 

“Businesses will welcome Hunt’s 110 new growth measures, including making full expensing for capex permanent and others designed to remove planning red tape, support entrepreneurs, unlock foreign direct investment, and cut business taxes. 

“The full impact on changes to the UK’s R&D tax regimes – which are to be merged into one, with lower thresholds for businesses to access – remain to be seen.   

“There were cuts to National Insurance rates for workers and the self-employed, but most of the announcements leaned towards minor adjustments rather than sweeping reforms.

“Given that National Insurance rates are under the centralised control of Westminster, this tax reduction will be felt by the working population in Scotland who already pay a higher rate of income tax.  

“Eyes now shift to Holyrood and the impending Scottish Budget on December 19. Questions will be asked about potential cuts to both personal and business taxes, and whether Scotland will introduce any similar cuts and growth measures in devolved areas.” 

David Postings, Chief Executive of UK Finance: “The Chancellor’s Autumn Statement today demonstrates a continued commitment to growth, which is essential for businesses and people across the country. We welcome this focus, the change to making full-expensing of investment permanent and the wide-ranging announcements on housing which will help people with the cost of their homes.

“It is vital that people have the housing they need and we’re pleased to see the commitment to increase Local Housing Allowance, something UK Finance has long called for. Greater housebuilding and an extension of the mortgage guarantee scheme will also help more homebuyers get on or move up the housing ladder.

“We welcome plans to introduce more flexibility and simplification of ISA rules and look forward to working with government on implementing changes to help more people save for the future.

“The new remit for the Financial Reporting Council to promote the growth and competitiveness of the UK economy is an important development and is in line with objectives recently given to financial services regulators.”