Spring Statement shows Chancellor 'cut off from real world', McDonnell warns

Mae Love
March 13, 2018

Until 2016, major tax changes were announced early in the year, in the Spring Budget, while the Autumn speech was primarily for economic forecasts.

The Pound to Euro (GBP/EUR) exchange rate was trending higher at the start of Tuesday's European trading as investors awaited the Spring Statement delivered by Chancellor to the Exchequer, Philip Hammond.

Chancellor Philip Hammond said borrowing was due to fall in every year of the forecast.

And the Chancellor said borrowing was due to fall in every year of the forecast, with debt predicted at almost 1 per cent lower than in November.

Mr Hammond rejected Labour "doom and gloom" over the state of the economy, saying the recession repeatedly forecast by shadow chancellor John McDonnell since 2010 had failed to materialise.

In spite of the weakening growth outlook, Hammond described himself as "positively Tigger-like" in his optimism, and said he "would have capacity for further spending" if the economy continues to grow.

Mr Hammond said he hoped this weekend's forthcoming summit of the G20 developed nations in Argentina would help to set out some concrete steps for achieving that.

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On housing, the Chancellor said the Government was working with 44 authorities who have bid for a share of the £4.1 billion housing infrastructure fund.

These have been revised to 1.5% in 2018, 1.3% in 2019 and 2020, 1.4% in 2021 and 1.5% in 2022.

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.

The OBR expects inflation to fall from its peak of 3% to the Bank of England's 2% over the next 12 months.

The OBR has already upgraded its fiscal forecasts twice over the previous year, in March 2017 and November, as tax receipts have come in stronger than previously expected.

Philip Hammond has said there is "light at the end of the tunnel" for the United Kingdom economy, with the government's official forecaster upgrading short-term growth projections and predicting falls in inflation, debt and borrowing - but warning of the growing impact from Brexit in future years. His Treasury deputy Liz Truss said there would be "no red box, no rabbits out of the hat and no tax changes".

Phillip Hammond has launched a public consultation on a tax system for single-use plastics, vowing to tackle the "threat to our oceans" in his inaugural Spring Statement.

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