Expert reactions to the Government’s first Autumn Budget

21 November 2024

On Wednesday 30 October, Chancellor Rachel Reeves took to the Commons' dispatch box and presented the 2024 Autumn Budget to Parliament.

The announcement marked the first Budget for the new Labour party, and the first UK Budget to be delivered by a female chancellor.

Academic experts from the University of Derby have shared their reactions to the announcements made in the House of Commons.

NHS Funding

Dr Denise Baker, Pro Vice-Chancellor and Dean of the College of Health, Psychology and Social Care at the University of Derby, said:

"The announcement from the Government of additional funding to develop surgical hubs, new diagnostic and radiotherapy equipment is welcomed but must be received with caution.

"Significant investment in Community Diagnostic Centres has already caused concern about where the staffing will come from to operate this equipment, undertake diagnostic procedures and deliver the quality of care the public deserves. Investment in the workforce is just as important as equipment or the estate, otherwise waiting lists and clinical outcomes will not be significantly impacted."

Denise added that she welcomed the increase in carer's allowance:

"There are a significant number of carers who are 'unpaid' but deliver high quality care at the point of need and help to keep their loved ones safe in the best environment - their own homes. I welcome this increase but also the recognition of the work that carers across the country do."

Economic impact

Eugene Michaels, Senior Lecturer in Economics at the University of Derby, said:

"The decisions announced in the Budget were largely as previously revealed/anticipated. However, neither the level of spending increases in both immediate day-to-day spending and longer-term public investment nor the increase in the cost burden on businesses were expected.

"On an individual level, the impact of the tax and benefit measures will fall progressively on the richer deciles of the household income distribution. From a business perspective, the combination of NI rises and minimum living wage increases will likely affect their growth and profitability. At a macroeconomic level, the measures will amount to a boost in government spending but a fall in private household consumption and potentially lower levels of business investment.

"A short-term boost to economic growth will be accompanied by an uptick in inflation and so a shift in market expectations for interest rates. Yields on long-term government borrowing are already adjusting upwards to the higher-than-expected borrowing requirements, slower future growth and higher inflation. For short term interest rates, the expectations are for fewer interest rate cuts by the Bank of England."

Effects on industry

Trevor Williams, Visiting Professor at the University of Derby, said:

"Over the parliament's term, public sector borrowing will be £140 billion higher than it would have been otherwise. The spending increases are front-loaded, with the bulk of them this year and the next tax year, rising by more than four per cent a year before dropping to a little over one per cent growth in the final two years.

"It is crucial to note that this is a tax on employers, and they are likely to pass much of it on to employees. This could potentially lead to lower pay increases or a reduction in the level of employment compared with what would have otherwise been the case. The potential effects on the UK's overall wage structure and employment levels are significant and need to be carefully considered."

Impact on hospitality

Leonard Cseh, Senior Lecturer in Hospitality at the University of Derby, said:

"With a strong emphasis on business rate reform and duty cuts, the Budget presented both challenges and opportunities for the hospitality and tourism sector.

"Given the critical state of many businesses within this sector due to surging operational costs, the industry's response must be strategic, proactive, and collaborative. The hospitality and tourism sector can leverage the budget measures and respond effectively.

"For example, the sector should engage actively with policymakers to ensure that the business rate reforms align with their needs. Lobbying for clear, fair, and long-term business rate solutions that reduce financial pressure is essential.

"Additionally, the sector should advocate for targeted relief measures for small and independent businesses to level the playing field and support local economies."

Predictions for the coming months

Eugene said:

"Overall, the budget measures were sensible considering the fiscal constraints faced by the government. However, there is a risk that they will fall short of the outcome intended. The extent to which individuals and businesses will adjust their behaviour in response to the tax measures will determine the amount of tax revenue raised and the levels of wage growth and unemployment.

"Whether additional borrowing will still be needed in the coming months depends on how effective the government's investment spending decisions are and whether they show signs of boosting long-term growth. The upfront layouts in day-to-day spending may not be enough to stabilise the public services and strengthen the resolve to reform them. If all these go against the Chancellor's hopes, she may need to raise taxes and borrowing further in the future, even after this Budget's record tax burden of 38.2% of GDP."

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