The UK's second budget statement of the year, scheduled to be delivered by the Chancellor of the Exchequer (the UK's term for its minister of finance) on Wednesday 22 November, will probably not contain much in the way of surprise.
The days are long gone when the Chancellor (currently the Right Honourable Philip Hammond but not for much longer if rivals in his own political party have their own way) went into virtual purdah for weeks before making his budget statement to the House of Commons (the UK national government's lower chamber).
In the 21st century a combination of leaks on the one hand, successful industry lobbying, well informed guesswork and official government announcements ensures that the world will have heard much if not all of the content ahead of delivery.
We plan to carry an extensive news and comment service here on Wednesday starting from around 12.15pm when the Chancellor will be nervously waiting to be called from the front bench to the dispatch box to begin his statement.
Current UK Chancellor of the Exchequer, Philip Hammond
Aim of the budget
The aim of the budget was once upon a time purely arithmetical. Its purpose was to set how the government plans to raise the money it needs to finance its principal objectives as were once outlined in the autumn statement (that has now been switched to spring just as the budget is switched to autumn).
Much more is demanded of it in the modern world. However unpromising the financial reality, the Chancellor is expected to produce a statement that will boost government morale, save the prime minister (and the Chancellor himself), and deliver party unity.
The budget must also satisfy the quite different needs of private sector businesses, public service institutions and around 66m people making up the estimated population of the United Kingdom of Great Britain and Northern Ireland.
No pressure then Mr Hammond. Speaking of the United Kingdom, the spectre of Brexit will hover over the budget as it hovers over every other single aspect of life in the country today.
Genevieve Moore, head of corporate tax at chartered accountants Blick Rothenberg, says: “With Brexit in the background, businesses of all sizes are facing a period of uncertainty and challenge, and it is up to the government to calm the waters.
“This should start now with a reassuring and simple budget,” she says.
Genevieve Moore, courtesy of Blick Rotherberg
With the context firmly in place, we can now turn our attention to the likely specifics of what will happen in relation to tax and spending as the government fights to cling on to the office it occupies courtesy of Northern Ireland's Democratic Unionist Party.
Budget statements usually feature many if not all of the following: changes in taxation (usually increases), details of existing and new allowances, broad spending commitments, deficit reduction and borrowing plans.
On the revenue side, the following will certainly feature: income tax, fuel tax, value-added tax (VAT), excise duties on alcohol and tobacco, stamp duty on residential property, inheritance tax, pensions, record employment rates, national insurance, and savings in departmental budgets.
Drink producers, tobacco manufacturers, estate agents, house conveyancing firms and personal estate planners will all be watching with keen interest.
Acknowledging the OBR
The Chancellor will need to acknowledge that the Office for Budget Responsibility (OBR) recently announced that it had revised its own projects for current and future growth.
Having acknowledged them, he will then promptly ignore them to all intents and purposes. Movements in sterling and inflation are a given. As are trends in deficit reduction and the national debt.
On the spending side, we will hear about plans for the NHS, education, research and development, infrastructure (probably focusing on HS2, HS3 and Crossrail 2), backing business and the freezing of fuel duty.
We will hear little or nothing about the postponement of previously announced infrastructure projects to build new roads, or to improve and link up existing ones. Unless the cuts are to be hailed as proof of budgetary discipline.
Credibility, community, opportunity
In the ground in between we will likely hear much talk of credibility, community, opportunity, efficiency, value for money, fairness and sustainability.
The NHS, incidentally, is projected to cost £149bn in the current year, compared with £119bn in the 2009-10 budget statement. Education is costing £102bn, compared with £88bn.
The biggest single major item of expenditure is 'social protection', which includes welfare and pensions. The projected cost of social protection in the current year was £245bn, compared with £189bn in 2009-10.
But the Office for National Statistics has produced figures for actual spend rather than projected spend. These show that £264bn was spent on welfare in the fiscal year ending April 5 2017.
Of this, £111bn, 42%, was accounted for by state pension payments. We are not predicting that this will change this week. But at some point, whoever is Chancellor will find it impossible to resist raising the pension age still further and cutting the real value of the payments.
Industrial strategy and cutting edge technology
Industrial strategy, cutting edge technology and innovation, with the UK leading the world on both these fronts and others, are sure to make an appearance. Along with 'highly skilled workforce'.
The current Chancellor is said to be obsessed by increasing productivity - the amount of output per hour worked. Before the global financial crisis this grew at an average of around 2% a year.
But the recent output of the OBR includes negative predictions on productivity which are scheduled to be published as part of the blizzard of additional documents that traditionally accompany the budget statement itself.
In any event, economic commentators are increasingly calling into question the way in which productivity is calculated. The changes in working patterns as automation replaces some jobs completely and reduces the cost of others cannot be ignored.
But understanding of the implications and their fiscal and monetary impact remains limited.
Crucial to support improved productivity: KPMG
It is crucial that significant emphasis is placed on measures that will help support improved productivity performance within the UK, says accountancy and professional services giant KPMG in a recently issued report.
“It is possible that Brexit deals a significant blow to productivity, as the country’s international links and access to talent come under strain. But, at the same time, enhanced productivity is the only answer to helping the UK avoid a weakened economic future.
“The Budget should therefore focus on investment in the economy’s long-term future, by prioritising measures that encourage improvements in productivity across all parts of the UK,” says KPMG.
The headline rates of income tax are unlikely to change. The current personal tax-free allowance of £11,500 a year should rise to £12,000 in the next fiscal year (starting April 6 2018) and £12,500 the following year.
The Chancellor could be tempted to shelve those commitments by his immediate predecessor George Osborne. He could also be tempted to shelve the planned £2,000 increase to the higher rate allowance.