Below is our analysis of the Chancellor’s Autumn Statement, followed by an outline of the Opposition’s response and immediate reaction from selected journalists:

Tetra’s Take: Autumn Statement

Even before the Chancellor arrived to make his speech today commentators from across the political divide were united that whatever the Chancellor chose to say, the Autumn Statement was largely a sideshow with the ongoing Eurozone Crisis. The sombre mood, combined with the fact that most of the statement appeared to have been briefed in advance, meant that the Statement risked turning into a damp squib.

Even so, George Osborne cannot have been relishing his appearance at the dispatch box today, having been forced to accept that his 2015 target for eliminating the structural deficit would be missed. 

But he probably sat down knowing that his discomfort could have been much worse, and he appears at least to have won the expectations game  – with the  OBR predicting that the UK would not fall into recession in the next year, alongside positive figures on the cost of borrowing due to low interest rates.

A consummate political operator, Osborne insisted throughout that the public still blame the last Government for the current economic situation and pointed to new evidence from the OBR that the scale of the problem left by the outgoing Government was even greater than previously anticipated. 

Laying the blame for the downgrade in economic indicators at the feet of the Eurozone crisis and energy price inflation, he poured scorn on Labour’s alternative plans, pointing out that the debt crisis unfolding in Europe was obvious to anyone watching their TVs.

To the Chancellor and his team, the Eurozone crisis vindicates rather than challenges the deficit reduction strategy, and he did not shy away from warning of the dire consequences of further borrowing and a loss of the bond markets’ confidence. In fact he pitched the battle against the deficit as a moral crusade, an imperative, so that future generations were not burdened with unsustainable debt.

The Chancellor was also in no mood to compromise with the public sector unions ahead of tomorrow’s planned strikes, with the announcement of a 1% cap on pay increases for public sector workers combined with inflammatory rhetoric about the action which has been proposed for tomorrow.  Hidden in the figures too are job losses in the public sector amounting to 700,000 by 2016, as opposed to the 400,000 previously predicted.

The Chancellor went out of his way in the statement to show he understood that people and business were hurting, announcing a raft of measures for both - including up-rating benefits by September’s 5.2% RPI, increases in the state pension, cancelling petrol duty increases, more help for small and medium sized businesses, and a raft of infrastructure measures spread throughout the regions.  The Government is particularly sensitive to the charge that it is out of touch with the concerns of ordinary people, and it was clear that this statement was a statement for the “Worcester woman”.

While seeking to help on bread and butter issues he also made clear that some of the Government’s other more “compassionate” endeavours would have to be reined in. However he is likely to lose little support amongst the public from plans to ease up regulation of green spaces, and lowering the foreign aid budget.

The populist tone continued with pledges to radically reform employment law, cut red-tape and reform health and safety regulations - all of which will play well with the Conservative right flank. Equally popular will be his extension of the right to buy and the 50% discount for tenants wishing to exercise their right to buy. 

The Chancellor also continued the Michael Gove “Haigography” of recent months, saying that Gove had done more than any previous Education Secretary to improve state schools. To help him along, he announced the cash for 100 new free schools, showing the stead the Government puts in its flagship education reform.  

Meanwhile, as a particular concession to the Liberal Democrats, the Chancellor also recognised the crippling impact of growing youth unemployment and confirmed the £1bn fund for youth jobs with mandatory work activity for those that wish to continue claiming benefits.

All in all, a better day for the Chancellor than many had predicted and three things are patently clear. 1) Austerity is here to stay for the long haul 2) The Chancellor relishes a fight with the public sector unions 3) The Eurozone remains the main game in town and the Chancellor is powerless to do anything about it.

Opposition response: Autumn Statement 2011

A hugely important day for the Shadow Chancellor, it was felt by many, including Labour backbenchers that, against such a gloomy economic backdrop, Ed Balls had to land a serious blow to the economic credibility of the Government. Mr Balls began with that clear aim, declaring the OBR’s findings demonstrated the “truly colossal failure of the Chancellor’s plan”.

The Shadow Chancellor stated the cost of the Government’s “reckless economic gamble” - growth flat-lining and unemployment rising - meant the Chancellor would be borrowing £158bn more than planned a year ago and £37 billion more than Labour's “Darling plan” - despite £40bn more in spending cuts & tax rises. He suggested this was evidence enough to prove Plan A had failed and Osborne’s plan was “hurting, but not working” - a Labour line on the economy which the party hope will continue to gain traction.

Mr Balls, keen to emphasise third party support for his alternative, cited Christine Lagarde, head of the IMF as support for Labour’s slower and steadier deficit reduction plan. Lagarde warned “slamming on the brakes too quickly will hurt the recovery and worsen job prospects”. Mr Balls also quoted Ms Lagarde’s suggestion that "If activity were to undershoot current expectations, countries that face historically low yields should also consider delaying some of their planned adjustment” as further support for Labour’s call on the Chancellor to change course.

In what has been described as one of his most impressive parliamentary performances, Mr Balls also criticised the Chancellor’s approach to blame “anyone but himself”, citing various excuses offered by the Government since last year  - from snow to the Royal wedding - and argued that blaming the Eurozone was the latest example of a clear abdication of responsibility. This will be a focus for the Shadow Chancellor in the coming weeks, as Mr Osborne seeks to blame the crisis for Britain’s economic difficulties. Mr Balls argued that the UK recovery was killed off a year before the current Eurozone crisis hit, highlighting the only Eurozone countries to grow slower than the UK in the past year as Greece, Cyprus and Portugal.  Mr Balls therefore suggests the UK economy’s problems are largely, if not exclusively, down to the Chancellor’s determination to stick to a plan which is “choking off recovery”.

Finally, Mr Balls argued that the Chancellor’s “cobbled together package of growth measures” was not the “game changer” required for the UK, but simply “more of the same” and a “fantasy growth package”. Labour may argue in addition that many of the announcements the Chancellor has made today row back on the spending cuts and tax rises he announced when entering office:

·         -A youth contract announced today, after cutting the Future Jobs Fund;

·         -A freeze in rising petrol duty in January, after raising VAT last year

·         -Further investment in a regional growth fund, after scrapping the previous government’s Regional Development Agencies

The Labour Opposition, in conclusion, believe that the cost of the Government’s failing economic plan means £100bn more in extra borrowing - not to invest in jobs and growth but to be spent on amongst other things, an increasing benefits bill.

Instant reaction

Fraser Nelson, Spectator Editor: “ I’m afraid to say we’ve just seen Gordon Brown’s 13^th Budget” & “This is one of Ed Balls’s best parliamentary performances, even if you don’t agree with it”

Robert Peston, Business Editor, BBC News: “The OBR comes as close as possible to saying that the Chancellor flunked debt tests”

Nick Robinson, BBC Political Editor, “There's plenty of pain - for families in receipt of working tax credits, for public sector workers whose pay is in the firing line, and for anyone under the age of 52 who'll have to work longer.”

Stephanie Flanders, BBC Economic Editor “The Statement is every bit as gloomy as forecast... but Ed Balls wants to blast Mr Osborne both for being too rigid in his borrowing targets and for missing past targets, quite a feat”

Gaby Hinsliffe, political commentator “I take four conclusions from this 1) Osborne is not backing down from escalating the public sector fight 2) Austerity may last a generation 3) We may have lots of one term Tory MPs, 4) The influence of the Liberal Democrats is quite strong.”

Daniel Knowles, Telegraph Comment Editor, “If the OBR is being too optimistic then the Conservatives’ hopes for election victory are toast”

Daily Mail Headline “George goes for broke!  Chancellor announces massive stimulus programme as he admits that the outlook is worse than we thought!”

Autumn Statement: Top line measures