Published: Sat, March 16, 2019
Economy | By

United Kingdom cuts growth forecast

United Kingdom cuts growth forecast

The parliament will vote to decide whether to delay Brexit on Thursday.

In Hammond's speech yesterday, the Treasury's official view on a "disorderly Brexit" were also made clear, during which Hammond said it had the potential to become "a significant blow" to the United Kingdom economy.

Hammond told lawmakers he could relax his grip on the public finances if they spared Britain the shock of leaving the world's biggest trading bloc without an agreement.

"I hoped we would do that last night, but I am confident that we, as a House, will do it over the coming weeks".

But he warned that the progress Britain has made on cutting its borrowing would be at risk without an orderly exit from the European Union with a transition period.

Hammond revealed in his Spring Statement that the forecast for the country's growth in 2019 was 1.2 percent, the weakest since 2009, a sharp drop from the 1.6 percent predicted in the his budget last October.

"That is not what the British people voted for in June 2016", he said.

He repeated his forecast that there would be a Brexit deal "dividend" as companies regained confidence and he could choose between increased spending on public services, capital investment and keeping taxes low while also bringing down debt.

Responding to the Spring Statement, chairman of the LGA Lord Porter said: "The government's plan to publish the Spending Review alongside the Autumn Budget this year could exacerbate the funding challenges facing councils and will severely hamper their ability to plan ahead for next year and beyond".

Mr Hammond also used the statement to announce a number of extra funding boosts for Scotland, including £65 million towards the borderlands growth deal for local authorities in the Scottish Borders, Dumfries and Galloway, as well as £79 million for a new national supercomputer in Edinburgh.

IFS director Paul Johnson noted that Brexit and its unknown outcome had seen Hammond hold back on significant spending announcements based on better-than-expected tax revenue.

Britain's parliament rejected that plan in January and again on Tuesday.

In documents released alongside Chancellor Philip Hammond's Spring Statement, the Office for Budget Responsibility (OBR) said growth in the United Kingdom and global economies had slowed since October's Budget, leading to a downgrade in its short-term forecasts.

"The forecast changes and policy decisions leave (Hammond) with £26.6 billion (1.2 per cent of GDP) of headroom against his fiscal mandate", the OBR said.

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