Schroders : UK Autumn Statement reaction

Azad Zangana, Senior European Economist and Strategist, Schroders, said:

"There is clearly a focus on trying to boost investment across the economy, with the Chancellor having unveiled a number of tax breaks for both households and businesses.

"Our UK economic forecasts differ from the OBR as we are still expecting the UK to have a recession early next year amid continued weak growth. Furthermore, while inflation has come down to 4.6% this level remains far too high.

"This is why a significant amount of focus today has been on delivering supply side reform where possible - clearly demand has been quite strong in the economy, but supply hasn't quite kept pace.

"What's more, the big risk from today's statement is that it may prove inflationary if the supply side doesn't grow in line with demand.

"In summary, we didn't expect this many measures at this stage - we thought we would see more pre-election giveaways at the next Budget. Today's Autumn Statement demonstrates the pressure the Government is under with an election imminent over the coming year."

Sue Noffke, Head of UK Equities, Schroders, said:

"This is an Autumn Statement for the masses; there were no changes to inheritance tax with the focus instead on putting money back into the pockets of the population.

"There is however a risk that this could be inflationary with growth expectations remaining low and, until now, inflation forecasts also declining.

"We are pleased to see the overarching focus on business investment and tax reform with the ultimate objective of solving the UK's long-standing productivity challenge."