By Adam Walker, Economics Correspondent Follow @adamwalker8715
Last Thursday’s 2013 Autumn Statement heralded a “responsible recovery”.
With signs of a brighter economic future in 2013 the chancellor was quick to note that there are still difficult decisions to be made and the UK economy was by no means in the clear. The question left in the minds of the British public was: What can we expect in 2014 and beyond?
Working Late Again
One of the most controversial points from the Autumn Statement has been the rise in the age threshold for a state-funded pensions. The age is set to increase from 67 by 2028 to 68 in the 2030s. Estimated to save in the region of £500 billion over the next 50 years, the chancellor justified the move by banging the ‘building a long-term future’ drum, along with ‘steadying the ship’ clichés and the like.
Critics have been quick to label this as a “work-yourself-to-death” policy that will take advantage of those in their 20s and 30s, who could be working to the age of 70 and beyond before being able to retire.
The deputy prime minister stated that this was part of the ‘responsible recovery’ and a result of the average life-span increasing with each generation. He cited that an individual should spend roughly one third of their lifetime in retirement, adding that “if that’s the rule of thumb then it needs to keep up with the fact that people are living longer. So the retirement age shifts.”
Whether you view it as responsible economics or the rise of a geriatric labour force, what this does mean that many who have recently entered the employment market should probably get comfortable. We’re likely to be here for a while.
Welfare Woes
The chancellor also outlined steps to cap welfare spending in 2014 that would commence in 2015 and announced the majority of benefit schemes would only see a one per cent rise next year. Crediting the recent growth in the economy to austerity, his ongoing cutbacks are consistent with aims of reducing government borrowing and increasing confidence in the UK’s still fragile economic foundations.
Mr Osborne did state that Job Seeker’s Allowance and the state pension schemes would be exempt from these cuts indicating that the government’s plans for increasing employment and tackling the growing issue of an ageing population are still far from finished. The question is, will 2014 see a drive in the labour and employment markets through subsidies, public investment or training schemes?
Investing in the Present and the Future
The day was not just about spending cuts and lengthier employment. Mr Osborne did announce that the current state pension would see a rise by £2.95 a week, meaning pensioners will be £800 better off over five years. There was also investment seen in the country’s younger citizens as children up to the age of seven will be eligible for free school meals and fuel duty increases are to be cancelled.
Finally, the statement confirmed that energy bills would not be increasing thanks to a change in the green levies structure moving into 2014, despite Labour being critical of the practicality and transparency of the system.
Stepping into 2014
With 25 days left of the calendar year many would say that this year has been a year of strong, sustainable growth for the once broken and battered UK economy. As 2014 approaches the people of Britain will be turning their focus onto what the government has in store for the UK economy, asking what the government plans to do with the money saved from its austerity policies and when will we “feel” like we are free of the recession’s grip.