Visit our new website:

Spring Statement 2018: Philip Hammond signals easing of austerity

  • Wed, 14 Mar 2018 02:34

UK chancellor Philip Hammond has signalled an easing of austerity after a decade of severe public spending restraint in a Spring Statement that will fuel demands from Tory MPs for more cash for hospitals, schools and defence.

Mr Hammond described himself as “positively Tigger-like” as he presented upgraded forecasts for the economy and public finances. He claimed that the country had reached “a turning point”, with the burden of public debt forecast to start falling next year.

But any Tory hopes of a big increase in public spending are likely to be dashed, as Mr Hammond set out official forecasts that would leave Britain near the bottom of the Group of Seven economic powers in growth.

The chancellor’s tone was markedly different from his normally austere rhetoric, making light of his “Eeyorish” reputation to proclaim that he was building an economy “where prosperity and opportunity are in reach of all”.

But the chancellor’s innate caution was reflected when he noted that this only amounted to “light at the end of the tunnel”, a signal to cabinet ministers to temper their demands for extra spending ahead of his main Autumn Budget.

Mr Hammond told MPs in a brief statement on Tuesday lunchtime that he would take “a balanced approach”, using any fiscal leeway to bear down on debt and keep taxes low as well as leaving modest room for extra public spending.

He said he was on track to meet his target for borrowing no more than 2 per cent of national income in 2020-21 with £15.4bn of headroom, giving him some room for higher spending on priority public services in the autumn.

But the real battles over public spending will come in 2019, as Mr Hammond announced a multiyear Whitehall spending review that will set the political battle lines for an election scheduled for 2022.

Mr Hammond presented forecasts by the Office for Budget Responsibility, which upgraded its growth projection in 2018 from 1.4 per cent to 1.5 per cent and lowered its forecast for borrowing in 2017-18 to £45.2bn from £49.9bn predicted in November.

But the new forecasts for growth and borrowing did not give the chancellor the £10bn borrowing improvement many economists had predicted and so limit Mr Hammond’s capacity to open the spending taps later this year.

The independent Office for Budget Responsibility ignored recent improvements in productivity growth, judging that the economy needed to slow to keep inflation in check and that some of the improvement in receipts was likely to be temporary.

Mr Hammond put a brave face on the figures. “Forecasts are there to be beaten,” he said. “As a nation, we did it in 2017.”

The OBR’s new forecast for growth for 2018 is slightly below the average of recent independent forecasts and leaves the UK growing less quickly than most other G7 economies.

The OBR predicts that the UK economy will grow by only 1.3 per cent next year, 1.3 per cent in 2020, 1.4 per cent in 2021 and 1.5 per cent in 2022. Over the whole period, the fiscal watchdog slightly reduced the amount of growth it thought was likely.

Public borrowing is forecast to fall from £45.2bn this year to £28.7bn in 2020-21 and £21.4bn by 2022-23.

The OBR also published a profile of spending on the UK’s £37bn “Brexit bill”, with the final payments not falling due until 2064 as young officials in the EU’s Brussels bureaucracy draw down their pensions.

Mr Hammond remained true to his word not to announce any new tax or spending commitments in his first, pared-back Spring Statement.

But he announced several consultations on tax issues, including one to explore how online platforms such as Airbnb can “help their users to pay the right amount of tax”.

The Treasury also published suggestions for how the UK government could tax large digital businesses, along with proposals to ensure that online companies pay value added tax owed to ensure this flows to the exchequer. The chancellor launched a call for evidence on how to tax single-use plastics.




Related Stories

Official speeches and statements - March 11, 2018
  • Sun, 18 Mar 2018 04:45

India/International Solar Alliance FRANCE IN THE UNITED STATES / Embassy of France in Washington, D.C.

Putin eyes huge win as Russia goes to the polls
  • Sun, 18 Mar 2018 04:44

Kathrin Hille in Moscow March 17, 2018 Russians have begun voting in an election expected to confirm Vladimir Putin as president for another six yea...

Conservatives need to be as economically bold as Margaret Thatcher
  • Sun, 18 Mar 2018 02:36

The UK economy needs higher growth, higher productivity and higher spending on public services such as the NHS George Freeman March 17, 2018 There...

Fast radio bursts: What are these ‘insanely powerful,’ unexplained signals from space?
  • Sun, 18 Mar 2018 01:28

March has been a landmark month for fast radio bursts with three of the unexplained signals from outer space picked up by satellites, including the st...

Official speeches and statements - March 14, 2018
  • Sun, 18 Mar 2018 00:51

Brexit/EU nationals in UK FRANCE IN THE UNITED STATES / Embassy of France in Washington, D.C.

Russia summons British ambassador as it readies to expel diplomats
  • Sun, 18 Mar 2018 00:50

MOSCOW, March 17 (Reuters) - Russia's foreign ministry summoned Britain's ambassador to the country, Laurie Bristow, for a meeting on Saturday, Russia...

Total Motorcycle Cool Wall • Re: #372: This or That? 2006 Ducati GT1000 vs 2018 Zero SR
  • Sat, 17 Mar 2018 22:38

...and yes, I know I flipped the Zero SR image, I didn't have one that faced left. MikeStatistics: Posted by totalmotorcycle — Fri Mar 16, 2018 10:1...

Theresa May says public does not trust Tories on public services
  • Sat, 17 Mar 2018 22:36

Laura Hughes in London March 17, 2018 UK prime minister Theresa May has said the Conservative party needs to face up to the “political fact” tha...

Comment on 2018 Kawasaki Z900RS: MD Ride Review (Bike Reports) (News) by Regan
  • Sat, 17 Mar 2018 20:36

Austin how about your comments on two previous reports on this machine . Now you were saying considering buy it. Sure you were . Comments for Mot...

Hong Kong’s first home offer of 2018 poised to sell out as buyers snap up Wheelock’s Malibu flats
  • Sat, 17 Mar 2018 19:09

Wheelock & Co., which last week kicked off Hong Kong’s first sale of residential property this year, is poised to extend the success of its ...

You could be eating lab-grown meat by the end of 2018 video - CNET
  • Sat, 17 Mar 2018 17:13

From burgers to chicken nuggets, several companies are producing meat from a petri dish. CNET Crave

French press review 17 March 2018
  • Sat, 17 Mar 2018 16:55

As Russian President Vladimir Putin prepares to get his job at the helm rubber-stamped for another term, Western government close ranks against him. A...

News Categories