The Autumn Statement: the Brexit balancing act

23 November 2016 - by Connor Daly

In Philip Hammond’s first major financial statement as Chancellor since the UK voted to leave the EU, Northern Ireland is to receive an extra £250 million for infrastructure, in accordance with the Barnett Formula.

With differing rates of enthusiasm, our politicians welcomed the announcement. This sum is for capital funding, not everyday projects. Speculation has it that Belfast’s York Street Interchange may be back on the cards, although Finance Minister Máirtín Ó Muilleoir was quick to manage expectations on the BBC’s Evening Extra.

The Chancellor sought to reassure business that the UK’s economy is “match fit” for the challenges and opportunities that lie ahead. While the Office for Budget Responsibility (OBR) cannot foresee what deal will be agreed between the UK and EU, it has predicted the economy’s growth at 2.4 percentage points lower than that expected before June’s referendum.

As to those opportunities, investment in innovation, productivity and connectivity were key themes. The Treasury’s long-standing mission to return to surplus in 2019-2020 is no more; instead, public finances will be balanced "as soon as practicable".

Mr Hammond recognised economic growth across the UK has been imbalanced, pledging “to help those who need it now,” clearly targeting individuals and families whom the Prime Minister previously described as the “just about managing” (JAMs).

He sought to do this by: raising the National Living Wage from £7.20 per hour to £7.50 per hour (from April 2017); freezing fuel duty for a third successive year; committing £1.4 billion of government funding to deliver 40,000 extra affordable homes; and, interestingly, pledging not to make further cuts to benefits throughout the remainder of this parliament.

The Chancellor labelled his statement a “sober analysis of our fiscal position”. In response to the proceedings at Westminster, Minister Ó Muilleoir tweeted about the two ‘self-defeating’ Conservative government policies of austerity and Brexit. More infrastructure funds were welcome, he added, but a lower growth forecast, continuing austerity and cuts to resource budgets mean that future challenges remain. 

Mr Hammond confirmed government intentions to reduce corporation tax to 17 per cent. With this clarification of the government’s plans, Minister Ó Muilleoir stated that our local politicians can move into intensive negotiations on the “practical outworkings” of reducing our own rate to 12.5 per cent.

The DUP’s Sammy Wilson MP welcomed the statement, reiterating his scepticism of long-term forecasts, warning about “the possibility that more negative predictions can become a self-fulfilling prophesy.”

In the Alliance Party’s response, Dr Stephen Farry MLA described the plans as “a mixed bag, highlighting the fact that “there was hardly a mention of Brexit. The SDLP, meanwhile, emphasised austerity, claiming that the government seeks to implement “a slow down" in the policy "rather than a reverse.” The UUP’s focus was on the Executive’s capacity to deliver extra funding as they questioned the Finance Minister’s decision to proceed with a one-year revenue budget.