Chancellor George Osbourne took the opportunity to do away with the Pre-Budget Report and replace it with an Autumn Statement when the Coalition Government was formed. I’m not sure which sounds the most interesting.
The idea behind the report is to give the British public the opportunity to find out the state of the economy and the pressing matters facing the treasury.
To summarise the highlights:
* Next year, economic growth is expected to be stronger than expected (he expects), but this will be followed by expectedly slower than expected growth in 2011-2012.
* Borrowing is expected to fall from £148.5 billion to just £18 billion by 2015-16.
* Reflecting on the findings of the OBR, public sector job losses are predicted to total 330,000; that’s down from the 490,000 job losses that were originally feared.
The statement succeeded in detailing how the economy is expected to recover slowly but surely, and not collapse into a double-dip as had been feared in some quarters. Though remember, these are the Chancellor’s views. What is significant, however, is the expected impact of the VAT rise.
With 20% VAT coming into force on January 4, the belief is that it will contribute to the slowdown in 2011-2012. For freelancers and contractors, the VAT rise should have a negligible impact, as we don’t have to adjust product prices, labelling or computer systems. However, it may impact on the end client. Let’s just hope it doesn’t affect them too adversely.
