PA Consulting comments on the Autumn Statement

Jonathan Gillham, Chief Economist, says:

Falling inflation meant the Chancellor gained significant fiscal headroom to play with in his Autumn Statement. This meant he could both reduce the deficit and put forward a package designed to support business investment. Measures such as making capital allowances expensing permanent will, according to the OBR, raise our growth trend by about 0.1%, while adding almost £14bn to business investment. Coupled with measures in the Spring “growth budget” there is now a vastly increased set of measures to support R&D and innovation led investment. This will benefit the economy and our view is that these will play out with much bigger economic benefits than the OBR are suggesting.

But it wasn’t all positive news. The OBR have cut their economic forecast from 1.8% and 2.5% in 2024 and 2025 to 0.9% and 1.4% respectively. Inflation is expected to persist and interest rates will need to stay higher for longer. This will be bad news for households, businesses and markets, but much of this thinking has been baked in for a while as many forecasters have been anticipating this outcome. 

A key challenge the OBR has presented is a drop in people available for work, which is substantial enough for them to downgrade their long run growth assumptions from 1.8% to 1.6%. This will have the likely consequence of pulling down longer term economic forecasts making for a tough economic environment for whoever wins the next election.

Shaun Delaney, Head of Public Services, says:

In the Autumn Statement, the Chancellor built on his long-term plan for growth with a set of measures targeted at driving innovation through local areas – freeports, investment zones and new devolution deals.

There is a real opportunity to maximise our national growth by taking a locally led approach to innovation, building on existing pockets of best practice and ensuring collaboration across initiatives and funding streams.

How do we get the most out of these investments and ensure that innovation sticks, acting as a benefit multiplier rather than simply a cost reducer?

Take a locally generated approach and empower local leaders to bring businesses and communities together around solutions that work for their places.

Emphasise mission-led innovation with a clear purpose and priorities.

Put the citizen at the centre, with a strong understanding of what innovation can achieve for communities.

Derreck Van Gelderen, data and AI expert, says:

Investment in AI needs to be about building our skills and talent as much as our infrastructure.

Earlier this year our Minister of AI announced three focus areas: Investment, Regulation and Reach. Today's Autumn Statement shows that although there is investment going into our infrastructure, more needs to be done to build the AI talent pool and drive its adoption across the whole country. 

Has enough been announced for the UK to become the powerhouse it has its sights set on? 

Whilst the UK is following up on its promise of providing an additional £500m investment to fund more innovation centres and provide AI developers the compute they need; when compared to the investments announced today in other sectors it may not be enough to ensure that the UK becomes, as the Chancellor states, “an AI powerhouse”. 

Little has been mentioned about how the UK will promote AI across the nation, and not just limited to its innovation hubs. 

This is not an area where we can afford to be complacent as the UK faces competition for top AI talent from other hubs such as the US, China and France. To become an AI powerhouse the investment must grow both our infrastructure and our talent and we need to focus on helping both our public and private sector explore, experiment and evolve.

Stephen Farrington-Bell, healthcare expert, says:

No new money for the NHS with the Autumn Statement reconfirming previous health spending commitments. 

The NHS is on track for at least a £1.3bn deficit this year, with continued pressures from industrial action, demand and inflation, meaning productivity has heightened importance.

Capital budgets look set to continue to be restricted. 

Capital remains an issue in healthcare, and with capital budgets this year being raided for day-to-day spending, investment in critical infrastructure, digital (including AI investment) and wider productivity will be inevitably limited – exacerbating problems in the longer term.

Support for growing investment in the innovative life sciences industry in the UK is welcome, with the measures announced seeking to make the UK a more attractive place for global life sciences investment and advanced manufacturing. With more predictability over drug pricing, the five-year horizon is now clearer which will help unlock innovation and attract investment to the UK.

There is a growing role for healthcare providers, both NHS and non-NHS, in the productivity puzzle. 

With more than 2.6m people out of work due to long-term sickness, the Autumn Statement announced a number of measures - such as community mental health support, expansion of talking therapies and a new framework for occupational therapy - to address this. The contribution of occupational therapy, mental health, musculoskeletal services, and long-term condition management has never been more critical to the economy.

In light of the Autumn Statement, the NHS will need to continue to focus on areas where it has the power to address productivity, such as workforce management, operating theatre utilisation, lengths of stay, commercial and contract management, and the opportunities from digital transformation and AI. There is a need for grip and control in the short term, while managing the bigger issues.

David Oliver, Global Head of Transport, says:

The Autumn Statement has some really positive news for transportation. In particular the funding for low emission, but also the devo-max deals for Manchester and the West Midlands.

The devo-max deals have allowed local areas to innovate, not just in transportation, but more broadly. This freedom, coupled with wider funding for zero emissions should allow local areas to deliver better outcomes for their citizens. To now make this a reality, they will need continued support from Whitehall, true financial freedom and a truly national integrated infrastructure plan to make this a success.