How the Autumn budget hints at the sort of election the UK can expect

While it proved a welcome distraction from the 'Stop the Boats' theme that’s been playing out last month, it’s a note of seriousness on the true state of the UK economy. Tl;dr, it’s not good. Not that boats aren’t serious (two more drowned in the English Channel yesterday), but it’s a sharp reminder of how the news cycle can be relentless and unforgiving.

Hunt promised a budget for growth. The Office for Budget Responsibility isn’t forecasting much growth at all. You’ll forgive me for using the F-word to describe his autumn statement. Fudge.

Here’s the science bit. Hunt indicated that he’s got £30.9bn to spend, most of which he used to lower national insurance by 2%. He also made the business investment allowance permanent, which has been welcomed by corporate Britain, especially in manufacturing.

Despite the tax cuts, which the Resolution Foundation calculated as the biggest since 1988, the tax burden is on course to reach a post-WW2 high of 37.7% of GDP. By 2028-29, the average household will pay an extra £4,300 in taxes compared with 2019.

That won’t feel great.

One area of common ground between political and commercial marketing is the role logic plays in people’s decision-making. Most policy tends to depend upon working out details. (For example, ‘110 supply side reforms!’). Communication about policy tends to focus on the single thing that can get people’s attention and change minds, and that is not always rational. (‘Tax cuts!’)

Elections are won or lost based on what voters feel. We may (and should) debate the effectiveness of Christmas advertising, but the reality is that a Christmas shop for this year’s turkey with all the trimmings will probably cost a lot more than last year. All the talk of bringing inflation down won’t disguise the fact that what may have been £200 last year is now £300 due to food inflation, and that’s what people will notice.

And disaffection with the status quo has a significant effect on the political landscape. What’s real for people is the cost of everything and the feeling that they can’t trust the government to fix things it said it would. If they feel poorer, they won’t be happy.

We’ve seen this around the world this week. Two extreme right-wing candidates (Javier Milei in Argentina and Geert Wilders in the Netherlands) gained election success by harnessing dissatisfaction with their current governments, indeed in politics as a category. Nigel Farage has exploited this idea in the UK ad nauseam.

I will say there were good things in the Autumn Statement worth mentioning. For many freelancers, the abolition of class 2 National Insurance is helpful. And any policy to reduce late payments is super important for the many small businesses, especially in the creative industries. On the other hand, attempting to force people with mental health issues back to work isn’t going to persuade anyone that compassionate conservatism is a believable concept.

Rishi Sunak is reportedly lining up Claire Coutinho to replace Hunt in a pre-election reshuffle. I’m not sure how impressed Sunak was with the references to previous Conservative policies (introduced by Cameron) in education and introducing universal credit. Lest we forget, that was only five prime ministers ago.

What does this tell us about next year’s election? Another budget statement in the spring will offer more promises of tax cuts, but if the economy isn’t much better by then, the Tories will be toast.