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22 November, 2022

The Autumn Statement – reflections and the tax angles, part one

22 November, 2022

The term Fiscal Event seems to have crept its way into our everyday language. Just as we now turn over government ministers every few months, so we also have Fiscal Events several times per year.

The latest held earlier today, the Autumn Statement, had been leaked, briefed and foreshadowed so that by the time of the various announcements nothing was either a surprise or especially newsworthy.

We have the usual follow-up, with various politicians representing their various tribes, trying to persuade us that they will do better, and that they have a plan.

Then you get the occasional outlier, someone who simply says it is as it is. They are the ones maybe it is better to listen to. For various reasons they don’t have to spin anything or make rash promises or pretend that it will be alright on the night (if we follow them).

The outliers make it clear we are in deep do-do, and that we can expect very punishing conditions in the next few years. Lower wages across the board, higher taxes and a stagnant economy.

Then you get the independent experts, who try and put some numbers against the general doomsday picture presented by the outliers. They quantify the messy picture.

It’s at times like these, however, that we need to perhaps take a backward step and look back in time. Why? Because very rarely does this mix of politicians, outliers and experts get any of their predictions right.

The forecasts from last year, look pretty silly now. The forecasts from 2018, for instance, are completely wrong.

There is a big line between the macro and the micro, and there is a big swing between the numbers, nearly all of which has limited bearing on most of us. What we need to think about is the big picture and how it relates to us as individuals. And not get too wrapped up in the hullabaloo of all the various people trying to make sense of it all.

What we need to look at are simple things, like our income prospects, our investments and savings, our financial planning, our expenditure, our tax position, and ask ourselves “where are we heading?” based on us.

We know we will be asked to pay more tax, we know that inflation is here to stay, at least for a while, and we know the cost of living is increasing. Beyond that, we don’t need to figure out too much more. We need to focus on what we should do, and I will come to that in part two……