Philip Hammond’s first and last Autumn Statement (as the government moves to a new system of Autumn Budget and Spring Statement) came with few surprises for investors, although there were some points of interest for market commentators.
While some found the speech “dull”, others felt it was a more positive Autumn Statement than anticipated, given former chancellor George Osborne’s call for an emergency budget if the UK voted to leave the EU in June.
Richard Stone, chief executive of The Share Centre, said: “We have not had the emergency budget George Osborne had told us would be necessary if the UK voted Leave, and the economic data has been generally positive since the EU referendum vote on 23 June with growth, employment and retail sales all stronger than expected at least in the short term.”
“The fall in the value of Sterling has helped exporters, has boosted tourism and has helped increase sterling revenues and profits at companies with large overseas operations.”
Growth
Despite this growth issues have caused concerns, despite the announcement that economic growth in 2016 is expected to reach 2.1 per cent, higher than previous forecasts of 2.0 per cent.
Growth outlooks for 2017/2018 by the Office for Budget Responsibility (OBR) have been revised downwards however, with the 2017 forecast now at 1.4 per cent (from 2.2 per cent), it was also lowered for 2018.
Stone said: “All is not rosy and the government’s finances remain very challenged.”
“This was highlighted by the chancellor presenting revised growth forecasts from the Office for Budget Responsibility which show growth being lower than forecast through to 2021.”
Source: OBR
The chancellor admitted that growth was “slower, of course, than we would wish”.
He said: “While the OBR is clear that it cannot predict the deal the UK will strike with the EU, its current view is that the referendum decision means that potential growth over the forecast period is 2.4 percentage points lower than would otherwise have been the case.
Abi Oladimeji, chief investment officer at Thomas Miller Investment, added: “The UK looks set to face a bout of mild stagflation in the year ahead as growth slows materially at the same time that inflation spikes.”
Ian Kernohan, economist at RLAM, however, says the growth forecasts look very similar to the ones in March, “so there is little sense that they believe Brexit, when it happens, will be a significant headwind to growth”.
Public finances
On the budget deficit, Hammond confirmed he has axed the deficit targets set out by George Osborne. Borrowing is set to rise to £68.2bn by the end of 2016-2017 and £59bn in 2017-2018.
Additionally, the OBR’s forecast of higher borrowing and slower asset sales, together with the temporary effect of the Bank of England’s action to stimulate growth, translates into an increased forecast for debt in the near-term, he says.
The OBR forecasts debt will rise from 84.2 per cent of GDP last year to 87.3 per cent this year, peaking at 90.2 per cent in 2017-18.
Source: OBR
“In 2018-19, debt is projected to fall to 89.7 per cent of national income - the first fall in the national debt as a share of GDP since 2001-02,” Hammond said.
Kernohan said: “The deficit forecasts were close to expectations for the next few years: higher deficits than in the March budget, with a small deficit, rather than a surplus, planned for 2020/21.”
Neil Williams, group chief economist at Hermes Investment Management, said: “Let’s not get carried away. The fiscal screw will have to be tightened later if he’s to hit his new deadline.”
“First, the deficit is still high,” he said adding that “the recovery should have squeezed the deficit more than it has.”
He also says that “only in 2017/18 is the net debt-to-GDP ratio expected to peak – disappointing given real GDP is about 8 per cent up on its pre-crisis peak”.
Infrastructure
The biggest policy announcement centred on infrastructure where the chancellor says he will earmark £23bn for a ‘National Productivity Investment fund’ focusing on innovation and infrastructure. 
Agate Freimane, senior investment director BrickVest, said: “We welcome Mr Hammond’s infrastructure drive to build and improve the UK’s roads, railways and broadband.”
“Investors and businesses alike will benefit from the funding, which will trickle down to surrounding sectors such as property.”
The stimulus will be aimed at improving transport, digital communications, and overall productivity of the UK economy.
The Share Centre’s Stone added: “Personal investors should take this as an opportunity to look to invest in companies who will benefit from this increase in government investment – those companies that will deliver more houses, roads, rail improvements and digital transformations.”
Not everyone was convinced, however, as Colin Morton, manager of the Franklin UK Equity Income fund said: “Infrastructure and innovation were the buzzwords of the statement but in reality the sums of money announced will be spread thinly and it is not enough to move the dial.”
Meanwhile, Christopher Mahon, multi asset investment manager and director of asset allocation research at Barings, said: “The chancellor's infrastructure plan is upside down.”
“The Treasury has already committed eye watering sums of money to programmes such as HS2, Heathrow and Hinkley that won't be completed for another 20 years.”
“Billions upon billions have been promised, with those projects costing £56bn, £19bn, and £18bn respectively. It is a great shame that the chancellor continues to be seduced by the glamour of the mega and ignores the utility and timeliness of the micro. “
Housing
Another theme was the need for housing, as the chancellor announced he is to invest £1.4bn to deliver 40,000 new affordable homes.
Dean O'Neill, co-founder of Hunter Jones, said: “The chancellor’s pledge to build 40,000 new homes along with investment in infrastructure is a positive step forward in addressing Britain’s chronic housing shortage.”
As a result, there was a brief rally for housebuilders, but this was short-lived with many of the largest firms unlikely to benefit from the announcement.
Neil Wilson, market analyst at ETX Capital, said: “We saw a very brief rally in housebuilders like Taylor Wimpey and Grainger, but this faded pretty sharply as the help outlined by the chancellor seems to be mainly aimed at low margin sectors.”
“Not a lot of help really for the big housebuilders which are now down for the day as the chancellor did a bit less for this sector than markets would have hoped for.”
Mark Hayward, managing director of National Association of Estate Agents, added: “The measures announced during the Autumn Statement today to boost house-building go some way to making the housing market work for everyone, but quite frankly do not go far enough.”
Pensions
Also of note was what was not included in the statement – the usual raft of pensions changes usually given at this time by former chancellor George Osborne.
Indeed, pension savings were specifically excluded from the salary sacrifice changes announced in today’s Autumn Statement.
Simon Bashorun, financial planning team leader at Investec Wealth & Investment, said: “It is great news.”
“Where this option is offered, it remains an incredibly efficient way for individuals to contribute to their pension scheme, particularly where their employer pays part of the employer’s National Insurance saving into the pension plan.”
Andy Bell, chief executive of AJ Bell, added: “There was a refreshing lack of pensions changes in the Autumn Statement as the chancellor resisted the lure of the tax relief honey pot.”
“People not saving enough for their retirement is one of the biggest social crises we face and the chancellor needs to ensure the investment is commensurate with the reality that private pension savings are still woefully inadequate.”
However, some remain sceptical, with Rachel Vahey, product technical manager at Nucleus, adding, “although we’re glad pension savings have been excluded from these changes, the precedence the restrictions set is worrying and the concern must be pensions will get caught up in the next round of cuts”.
Insurance
A few minor policy changes were made in the Autumn Statement, as the chancellor raised insurance premium tax to 12 per cent from 10 per cent.
He noted that the rate is currently much lower than the rest of Europe, sending insurers slightly lower on the day.
He also announced reforms to whiplash claims, meaning car insurance premiums could save policy holders around £40 per year, according to government estimates.
However, Kevin Pratt, consumer affairs expert at Moneysupermarket, said: “As far as drivers are concerned, the chancellor seems to be giving with one hand and taking away with the other.
“If whiplash reforms can deliver £40 per policy savings and if insurers can be trusted to pass on those savings in full, that’s great news. “
“But the 20 per cent increase in insurance premium tax (IPT) is grim news for Britain’s households, affecting car, home and pet insurance, among others.”
“It’s a crude and punitive tax at a time when we’re seeing double-digit inflation in car insurance premiums.”
A spokesperson for British Insurance Brokers' Association added: “Over the past 15 months, policyholders have already seen an increase of 66 per cent in the IPT they pay – this further increase to 12 per cent in this regressive tax is outrageous.”