The chancellor’s long awaited Autumn Statement brought two months of severe market turmoil to a close yesterday. It ends with GBP/USD at a four-month high and GBP/EUR back close to the five year average. However the recession has apparently already begun.
The statement included higher taxes for higher earners and ‘stealth’ tax increases for the rest via frozen personal allowances, a process known as fiscal drag. However, pensions and most benefits will rise in line with inflation, 10.1%, and the minimum wage will be above £10 for the first time. Council tax can rise by up to 5% however, without a vote.
Big spending projects such as HS2 will go ahead and most Whitehall budgets will be protected in cash terms. However, with inflation still high that means a squeeze in real terms.
The market reaction was calm and appears broadly supportive.
Also, this morning, UK retail sales are still looking buoyant, if still below the pre-pandemic levels, while consumer confidence is still very low, but no lower than last month.
Elsewhere, Cop27 is set to end, but potentially without an agreement and “a breakdown of trust between north and south, between developed and emerging economies”, according to the UN secretary-general Antonio Guterres.
Business news includes news of four more strike days from Royal Mail, between 24th November and 1st December (traditionally its busiest day). Royal Mail has also failed in its bid to end deliveries on Saturdays. The government rejected their argument.
Twitter has closed its offices for the day as mass resignations have followed mass sackings.
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