No major rabbits but some big themes

Jason Hollands

With the exception of the proposed cut to the Money Purchase Annual Allowance, Philip Hammond's first - and last - Autumn Statement was largely devoid of the relentless tinkering to Isas, pensions and state-aided venture capital schemes that we have all gotten used to under the tenure of his predecessor.

The former chancellor George Osborne seemed to have had a penchant for conjuring up headline-grabbing surprises.

In fact Isas, VCTs and EIS received little mention at all in the supporting documentation of today's Autumn Statement, in marked contrast to the Budgets and Autumn Statements of recent years which have usually revealed some form of tweaking.

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In many ways a relatively boring Autumn Statement (from financial services perspective) is no bad thing after the torrent of changes over the last two years.

Advisers and their clients can breathe a sigh of relief that pension contributions were specifically excluded from the announced raid on salary sacrifice and that the mutterings of a fundamental overhaul on pension tax reliefs never arrived.

For now it seems higher and additional rate tax relief on pensions, and the ability to carry forward unused allowances live on to fight another day - at least until the next Budget. 

There were no major rabbits pulled out of a hat by the chancellor, but instead a little fluffy bunny in the form of a new National Savings & Investment three-year bond to be issued next April.

This is no doubt intended as a crumb to hard-pressed savers in a world of record-low UK interest rates. With an anticipated rate of interest of 2.2 per cent at a time or rising inflation expectations this might even stay ahead of UK inflation for at least half of that term.

The big themes were, as expected, investment in infrastructure and innovation (and home building) as the UK government becomes the latest to embark on looser fiscal policy, following the example of Japan this summer and the pledges made by The Donald during the US election campaign.

In this respect measures in the Autumn Statement are welcome but modest in reach. However, they can be seen as part of shift across the globe for politicians to step up and start pulling the levers of tax and spending to reflate growth, after years of leaving most of the heavy lifting in economic management to central banks through ultra-low interest rates and vast amounts of money printing.

Central banks have clearly reached the limits of what can be achieved through monetary policy alone and now the baton is being passed on to governments.

The times they are a-changing. 

Jason Hollands is managing director, business development and communications, for TilneyBestinvest.