CBI’s view on the Autumn Statement 18/11/2022

The MIA is a long-standing member of the CBI on behalf of our membership. It is the UK’s most effective and influential business organisation which represents 190,000 businesses together employing nearly seven million people.

What was in the Autumn Statement, and how will it impact you?

The Autumn Statement delivered the government’s plan for “stability, growth and public services”. However, the Chancellor Jeremy Hunt warned that stability “depends on taking difficult decisions now.”

Here are the key announcements affecting businesses:

• The threshold at which employers start paying National Insurance Contributions (NICs) on their employees’ salaries has been frozen for the next five years. For businesses, this means no further updates to thresholds in your payroll systems. The CBI will continue to call for full expensing, so businesses can see the cashflow benefit of the investments they make immediately.

• Freezing the business rates multiplier. This will ensure businesses do not face higher bills from April 2023; and removing downwards transitional relief means you’ll benefit from lower bills more quickly. You should receive a new bill reflecting these changes in early 2023 for the 2023-24 tax year.

• A windfall tax on profits of oil and gas firms increased from 25% to 35% and extended until March 2028. In addition, a new "temporary" 45% tax on companies that generate electricity, to apply from January 2023. The CBI is urging the government to give businesses certainty that these taxes are time-limited and focused on genuine unexpected windfalls, rather than a fair reward for the risks that they’ve taken.

• The Business Energy Support Package will be reviewed after April 2023. The CBI will continue to engage with the Energy Bill Relief Scheme and the upcoming announcement on what support for Business will look like following April 2023.

• The National Living Wage will rise from £9.50 an hour for over 23s to £10.42 from April.

• The Department for Work and Pensions (DWP) will conduct a review of workforce participation following the increase in the number of economically inactive people since the start of the pandemic. The CBI will engage with DWP throughout the review.

What does the OBR forecast mean for your business?

• The Office for Budget Responsibility (OBR) also published its forecast alongside the Autumn Statement, with a big reduction in the growth forecast for next year from 1.8% to -1.4%, and an expectation that we’re already in recession.

• Real Household Disposable Income per person is set to fall more than 7% over the next two years - the biggest on record - squeezing demand across the board.

• Inflation is forecast to peak at 11.1% in Q4 this year before falling sharply next year and return to its 2% target by 2027-28.

• The government also set out two fiscal rules, giving themselves 5 years to bring debt down as a proportion of GDP (instead of 3 years), and to bring overall borrowing below 3 per cent of GDP by the end of the forecast (2027/28), instead of the previous goal of balance budget by 2025-26.

• On the current forecast the government is set to meet both of its fiscal rules.

How are the markets reacting to the Autumn Statement?

• Initially, the pound slipped against both the Euro and Dollar in response to the Autumn Statement. As of 1pm on 17 November, the pound stood at $1.18 and €1.14, having depreciated by 0.9% and 0.3%, respectively, since Wednesday’s close.

• Equity markets were relatively muted in their response, with the FTSE 100 trading roughly where it has been for most of the day (having fallen in early morning trading). The FTSE 250 saw a temporary bump during the Statement before declining to a similar level to where it was in the morning.