A cut to stamp duty should be expected in new Chancellor Philip Hammond’s Autumn Statement, according to Richard Buxton, chief executive of Old Mutual Global Investors.
Buxton described the decision to exit the European Union as being “really bad news” and said Hammond (pictured) needs to be bold if the UK is to make the best out of the situation.
Speaking to the Guardian he said: “I am pretty sure that the government will, in the autumn statement, do some fiscal weakening, such as reducing stamp duty on housing transactions, cutting petrol taxes to offset the increase that will come from the weaker currency.
“The bigger question is: are they bolder? Do they go ‘right, well we are in a different world; if we can borrow at a ludicrously low rates through extensive debt issuance, then let’s do so, specifically to invest either directly or alongside private investors in infrastructure projects’.
“We could resurface [the] M1, we have a clear need for more gas-fired electricity generational plants. The private sector is not stepping up and doing any of this, unsurprisingly, so lets do some funding, some guarantees, make things attractive.
“It will be interesting whether they do that. But clearly, even just the former measures, let alone the latter, mean the budget deficit is going to be swinging out again. Now, that, to my way of thinking, is why sterling is weak and could weaken further, to be honest. Already it [the deficit] wasn’t coming in quick enough, but it is going to start expanding.”
He also told the Guardian that he feared the move could lead to a recession with the stock market having already priced in a “pretty significant recession” following large share price declines for house-builders and banks (more here).
He said: “Now I think the economy is going to judder to a halt; have a mild recession, but I don’t think it is going to be as severe as some of these shares are pricing in.
“That said, there is no mad rush to add to or buy into some of those stocks, because the real economy is only going to gradually emerge over the next three to six months.”
Historically the Autumn Statement takes place in late November or early December.