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Chancellor spends entire windfall on tax cuts
According to the Office of Budgetary Responsibility (OBR) the Chancellor spent virtually all the net fiscal windfall of £27 billion on personal and business tax cuts.
Group Editor of Shard Financial Media, which encompasses the Credit Strategy, Reward Strategy, TRI and FSE brands.
Group Editor of Shard Financial Media, which encompasses the Credit Strategy, Reward Strategy, TRI and FSE brands.
The economy has proved more resilient to the shocks of the pandemic and energy crisis than was anticipated. However, inflation has also been more persistent causing interest rates to rise to the highest level in 15 years.
According to the OBR, higher inflation boosts tax revenues but also welfare benefits while higher interest rates push up debt servicing.
However, because departmental spending is left largely unchanged, this delivers a net fiscal windfall of £27 billion. In his Autumn Statement, the Chancellor spent virtually all of this on a 2% cut in NICs, permanent tax relief for business investment, and further welfare reforms, leaving debt falling by a narrow margin in five years.
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