LONDON, 3 December 2014 – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), has commented on the economic implications of today’s Autumn Statement.

Tapan Datta, head of Global Asset Allocation at Aon Hewitt said:
“The overrun in this year's budget deficit has left the Chancellor with little leeway to relax the budget stance, and this was confirmed in today's Autumn Statement. The Office for Budget Responsibility’s (OBR) accompanying release is full of caution, notwithstanding the strength of the economy in 2014. While growth is revised up in the near-term, it’s revised down beyond 2015.

“Deficits are higher than would have been expected for any given level of economic growth and this largely reflects unexpected weakness in tax revenues.  Despite the poor performance of tax receipts, on the basis of a programme of very deep spending cuts the like of which has not been seen before, the OBR still thinks it is more likely than not that the deficit will turn to surplus by 2019.”

Interest rates and inflation
Tapan Datta said:
“Lower inflation and interest rates relative to earlier projections (which reduce expenditure on welfare and debt interest) offset to some extent the impact of weak tax receipts. We have already signalled these in our expectations over the next few years and this is not a surprise to markets.

“In our view, the uncertainties over such an ambitious programme of spending cuts are valid reasons for retaining some scepticism over the speed of deficit reduction signalled for the next five years and the length of time it takes for deficits to be eliminated. The burden of deficit reduction appears disproportionately concentrated on the spending side.”

Gilt markets
Tapan Datta said:
“There is no clear-cut implication for the gilt market from today's statement.  That said, we note that the Debt Management Office expects gross and net issuance to be higher in 2015/16 than the current financial year. Thereafter, issuance should decline, but with risks tilted towards a more gradual fall than the authorities are currently projecting.”
 

Media Contact: 
Colin Mayes                                    Marina Jane-Sanchez
Aon Hewitt                                      Capital MSL
01372 733689                                  020 3219 8811
colin.mayes@aonhewitt.com            marina.jane-sanchez@capitalmsl.com

Notes to Editors

About Aon Hewitt
Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  For more information on Aon Hewitt, please visit www.aonhewitt.com

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About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.