Autumn Statement spending plans represent 'very big fiscal risk', OBR warns

29 Nov 2023

The Office for Budget Responsibility (OBR) has warned the government that the spending plans outlined by Chancellor Jeremy Hunt in the recent Autumn Statement represent a 'very big fiscal risk'.

The independent OBR, which produces fiscal forecasts for the government twice a year, told MPs that the Chancellor's Autumn Statement spending plans carry a level of 'uncertainty'. According to the OBR, most of the promised spending will be funded by projected savings as opposed to income the government already received.

The Chancellor used the Autumn Statement to cut the main rate of employee national insurance contributions (NICs) by two percentage points from 12% to 10%; reform NICs for the self-employed, abolishing Class 2 NICs and reducing Class 4 NICs from 9% to 8%; and make Full Expensing permanent for those businesses investing in IT equipment, plant and machinery.

Commenting on the issue, Richard Hughes, Chair of the OBR, said: 'It is very difficult to assess the credibility of the government's spending plans, because after March of 2025 the government doesn't have any spending plans.'

A spokesperson for the Treasury replied: 'It is thanks to our action that we've achieved our target of halving inflation this year, but we are continuing to stay the course to get inflation all the way back down to 2%.

'The OBR has confirmed that our policies will reduce inflation next year while boosting growth and rewarding people for their hard work.'