Macroeconomics: UK economy, IB Economics

A quick look at an issue that is a perennial concern of businesses - the business rates system. At present, the fact that business rates are index-linked means that they are likely to leap next year to the extent that it imperils the survival of a number of businesses and is passed through in the form of higher costs to consumers, potentially sustaining inflation. 

Factor in the loss of state support for some sectors, and it represents the perfect storm for some sectors of the economy, notably hospitality. 

Benefits and pensions up in line with inflation - with the former more of a surprise than the latter, and the latter, well...I think you know my views. 

However, at least it seems that there's been a more genuine attempt to protect the most vulnerable than there's been for a while and whilst anti-poverty campaigners have welcomed the move, I suspect they're bracing themselves for a rise in poverty further down the line. 

A nice little story picked up today, and not mentioned in the Autumn Statement. The last change was to reduce fuel duty by 5p, from 58p to 53p, in the Spring Statement earlier this year. However, prior to that the duty had been frozen since 2011, since when there have always been suggestion that it's going to be uprated in line with inflation which would put us in line for as much as 23p increase in fuel duty. 

As a result, the Office for Budgetary Responsibility (OBR) report to accompany the Autumn Statement has assumed that this will be the case; the reality is that there's no chance it will happen in the current environment. 

And inflation is bad news for those people on fixed incomes, or whose incomes fail to keep up with the rising cost of living. 

The IFS forecasts that because the rate of increase in benefits was determined before inflation started to soar, most benefits will go up by 3.1%, about half the current rate of inflation, meaning that about 10 million of the most vulnerable will be worse off in real terms, and worsening inequality.