Published: Tue, March 13, 2018
Finance | By Loren Pratt

United Kingdom economy to grow slightly more quickly, Hammond predicts

United Kingdom economy to grow slightly more quickly, Hammond predicts

Promised to be a short update on forecasts, Philip Hammond's Spring Statement turned out to be 26 short minutes of politics: uplifting vision for the backbenchers and the television news, coupled with witty digs at the Opposition. However, its forecast for coming years remained unchanged, with GDP growth expected to sit at around 1.3% until 2020.

The Office for Budget Responsiblity has upgraded its forecasts for United Kingdom growth to 1.5% for 2018, slightly above the 1.4% it predicted in November.

Those forecasts, based on the assumption that Britain would stay in the European Union, saw growth of above 2 percent for each year between 2018 and 2021.

The government will borrow £45.2bn in the 2017-18 fiscal year, £4.7bn lower than previously thought, he told Parliament during his Spring Statement, according to forecasts from the Office for Budget Responsibility (OBR).

Worryingly for Hammond, the OBR said the economy was already running slightly faster than it could do without generating excessive inflation, even as it lagged behind its historic growth rates. The move was initially announced in last autumn's Budget.

"Another step on the road to rebuilding the public finances decimated by the party opposite", Hammond said.

"And while the budget deficit looks likely to come in nearly £5 billion lower this year than we expected in November, the explanations for this imply smaller downward revisions for future years".

Upbeat Mr Hammond in the Commons
Upbeat Mr Hammond in the Commons

At the weekend he said: There is light at the end of the tunnel because what we are about to see is debt starting to fall after it has been growing for 17 continuous years.

The spring statement will offer no new taxes and no new spending plans.

There was, he said "light at the end of the tunnel".

"We are building a Britain fit for the future and an economy that works for everyone", Hammond said.

Mr Hammond said he was inviting cities across England to bid for a share of £840 million to deliver on "local transport priorities".

Mr Hammond announced that London would receive and additional £1.7 billion to deliver 26,000 affordable homes - including homes for social rent, taking the total number to more than 116,000 by the end of 2021/22.

His deputy Liz Truss said there would be no red box, no rabbits out of the hat and no tax changes. He says its "reaffirming to see the Chancellor yet again covered the hot topic of housing, but we still haven't seen the delivery of promises from previous budgets, so only time will tell if these words will actually equate to action".

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