Four fiscal fragilities could emerge in time

While the Autumn Statement once again saw the Chancellor make the most of a poor hand, we remain concerned that many of his fiscal gambles are unlikely to fully pay off. To our minds, the assumptions that the recovery will become naturally tax-rich, that revenues from tax avoidance and other measures targeting the wealthy will be plentiful, that gilt yields will remain super-low and that the financial transactions will not be loss making in time all look a little optimistic.

As a result, while we expect the public finances to be boosted by a stronger economic recovery than the OBR anticipates, the next government will probably still need to implement the vast majority of the spending cuts that are currently planned if it is to attain an overall budget surplus.