Friday, 14 December, 2018

Spring Statement: Chancellor Philip Hammond reveals stronger borrowing forecasts

British industrial production Spring Statement: Chancellor Philip Hammond reveals stronger borrowing forecasts
Nellie Chapman | 13 March, 2018, 18:39

Britain's sluggish economy will grow slightly more quickly than previously thought this year in the run-up to Brexit, lowering the government's expected borrowing, chancellor of the exchequer Philip Hammond said on Tuesday.

But Hammond, delivering a half-yearly update on the government finances, said Britain's budget forecasters expected the economy to expand by 1.5 percent in 2018, up only a touch from a forecast of 1.4 percent in November even though the world economy is growing strongly.

Borrowing is also forecast to continue falling from 2018-19, with the deficit expected to drop below 2% of GDP next year.

In November, the GDP growth forecast for the next five years, up to and including 2022, was 1.4%, 1.3%, 1.3%, 1.5% and 1.6% respectively.

John McDonnell, the shadow chancellor, gave a robust response to the speech, criticising the "indefensible spectacle" of a chancellor "failing to lift a finger" to help struggling local authorities and the NHS.

Mr Hammond told Theresa May and her senior ministers that "thanks to the hard work of the British public, there is light at the end of the tunnel".

Mr Hammond has said he will not use the statement to announce any tax or spending plans, but Labour has called on him to end the financial crisis in our public sector.

Mr Marshall said that a "far stronger push" is still needed to "fund and fix the fundamentals here in the United Kingdom over the coming months".

In today's Spring Statement, Mr Hammond confirmed that London would get £1.67 billion to build 27,000 more affordable homes by the end of 2021/22.

Rachel McEleney, associate tax director at Deloitte, said the move to examine taxes on online selling was, broadly, a good one: "We welcome this call for evidence - many people have no experience of completing tax returns". Hammond will be updating the parliament on UK's economic outlook.

The medium-term forecasts were less upbeat, however, with the OBR predicting economic growth of 1.3% next year (unchanged from last November's forecast), 1.3% in 2020 (also unchanged), 1.4% in 2021 (down from 1.5%) and 1.5% in 2022 (down from 1.6%).

The Office for Budget Responsibility's forecasts for the deficit, debt, GDP and productivity will form the backbone of the statement. Growth in 2017 was 1.7%, compared with the 1.5% forecast by the OBR a year ago.

His deputy Liz Truss said there would be no red box, no rabbits out of the hat and no tax changes.

Plastic waste is also in the Treasury's sights, with Mr Hammond announcing a consultation on implementing a plastic tax.