The inflation target remains at two per cent, but with more flexibility and more tools. In practice, we think this is likely to mean much higher short term inflation. This is good news for inflation linked bonds but bad for fixed rate bonds.
The national insurance rebate to employers offering Defined Benefit pension schemes (such as final salary schemes) is disappearing. This will make them more expensive to run. Either members or companies will have to increase contributions or perhaps employers are more likely to close the schemes.
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Economic growth is looking even worse in the UK than we thought making it more likely that credit rating agencies, other than Moody's, will also cut the AAA rating. Extra infrastructure spending could help but £3billion is relatively small and does not start until next year.
The increased personal allowance will bring a lot of pensioners out of income tax altogether.
Help for people buying new houses can only be a good thing and may help kick-start the very slow housing market.
The planned fuel duty rise will be scrapped which will help businesses and individuals, but the falling pound is still making fuel more expensive."

Mike Deverell, investment manager at Equilibirium Asset Management

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