When is it?
Today! (Wednesday 23 November). The Chancellor Philip Hammond will deliver his first Autumn Statement immediately after Prime Minister’s Questions, which will finish at 12.30pm.
What are the key themes?
Unlike some previous statements, Hammond has kept his cards relatively close to his chest as to what he might say tomorrow.
One of the few things we know Hammond will mention is the £2bn worth of tax breaks for science and research which was announced by the Prime Minister on Monday.
It is expected that the forecasts he unveils will show slower growth and higher borrowing, while benefits, leting agents' fees and the National Living Wage likely to cmoe under the microscope as well.
There have been widespread rumours of a freeze in fuel duty, while some think he might announce a cut in air passenger duty to help lower the cost of foreign holidays which have been sent soaring the pound’s fall.
Elsewhere, it has been mooted that the income tax threshold may be lifted to £12,500 while the top tax bracket could also be shifted up to £50,000.
You might’ve seen that word ‘Jams’ bandied about by the press in the run-up to tomorrow as well. They are families which are “just about managing”, so look out for some policies aimed at hard-pressed families – a section of society Theresa May is trying to get on board.
The Telegraph has also suggested that “middle class salary perks” might come under fire from Hammond and the gang. They include things like employer paid-for gym memberships and mobile phone contracts, which workers count as pay but can’t be taxed as they’re not part of the gross salary.
Then of course there’s Brexit.
Is Hammond ready to splash the cash?
Not quite it seems, although he has recently said that the government will adopt new rules on borrowing, opening the door for a slilght increase in spending.
Although he’s as good as abandoned George Osborne’s plans to balance the books, the Chancellor has repeated his belief that Britain should live within its means, so it’s unlikely that anything particularly radical (in terms of spending) will take place.
“The pace of deficit reduction remains frustratingly slow so, despite a strong case for stimulus, the Chancellor is likely to err on the side of caution,” said Konstantinos Makrygiannis of economic forecasting group EY ITEM Club.
That said, some reports reckon Hammond could announce £100bn worth of additional spending over the coming five years.
What’s this about an infrastructure bond?
Infrastructure is the hot topic of the moment after Donald Trump’s victory speech sent related stocks, particularly the miners, soaring.
Several analysts have lent their weight to the suggestion that investment in railways and roads will be the most likely form of stimulus announced by the Chancellor tomorrow.
“A crystal clear focus is needed on infrastructure, investment and innovation from the Chancellor, so that firms are given the very best environment in which to grow, both at home and abroad,” said CBI chief economist Rain Newton-Smith.
On top of railways and roads, there also might be some news on the fibreoptic and 5G rollout which has been mooted for a little while.
This is where the bond comes in. There have been rumours that the government will look to fund some projects through Treasury-backed bonds, although others have dismissed the idea out of hand.
What might happen to sterling?
The British pound has been in recovery mode ever since the EU referendum result sent it plummeting at the end of June.
Sterling has risen more than expected on decent economic data since then, mainly because economic forecasts about the impact of a ‘No’ vote were so gloomy.
Analysts reckon that Trump’s success across the pond may have helped Britain’s position too, meaning that, although still volatile, the currency has retraced some of the initial losses sustained versus the euro and the US dollar.
But don’t expect tomorrow to make too much of a difference, says Bank of America Merrill Lynch’s FX strategist Kamal Sharma.
Speaking to the FT, he said: “It looks like sterling is going to trade sideways, until we get more into the politics of Brexit.”
What about the housing market?
Autumn Statements have proven to be fertile ground for the housing market and housebuilders in recent years.
We’ve had various housing reforms from the help to buy scheme through to stamp duty hikes, so it’s expected that Hammond will devote part of his speech to similar kind of issues tomorrow.
“There is the possibility that they could cut stamp duty on houses and that would help to regenerate the housing market which seems to be slowing a little bit,” said Hantec Markets’ Richard Perry.
A £3bn “get Britain building” fund has already been announced to help smaller housebuilders build around 25,000 new homes by 2020, while a further £2bn has reportedly been set aside to pay for a further 15,000 new homes on surplus public land.
A short statement? Perhaps.
Rumour has it that the speech will be much shorter than some of the tiresome, lengthy monologues we’ve heard in the past.
Officials reckon tomorrow's autumn statement documentation will be about half the usual size, cutting out some throat-clearing bumpf.
— Jim Pickard (@PickardJE) November 22, 2016