Spring Statement: Hammond promises ‘deal dividend’

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The chancellor has mortgaged to spend a £26.6bn Brexit war chest to boost the economy, if MPs vote to forget the European Union with a deal.

Philip Hammond vowed to relaxed up more money to help end austerity in a “deal dividend”.

However, he bring to light tax cuts and spending rises depended on a smooth Brexit.

Mr Hammond old his Spring Statement to warn that a disorderly Brexit would give out a “significant” blow to economic activity in the short term.

He said the verdict by MPs to reject Theresa May’s Brexit deal for a second time had left a “a cloud of uncertainty send to the gallows over our economy”.

Growth slowdown temporary

The latest figures from the Workplace for Budget Responsibility (OBR) forecast that the UK economy will grow at the dullest pace since the financial crisis this year.

The OBR cut its 2019 extension forecast to 1.2%, the weakest growth rate since 2009.

That is a suggestive cut from the 1.6% expansion predicted by the government’s economic watchdog latest October.

After that growth is expected to rebound.

Mr Hammond mean the economy had “defied expectations” as wages were expected to keep prospering at rates of above 3% over the next five years.

He helped that the government would have up to an extra £26.6 billion to disburse if MPs voted to leave the EU with a deal, while still meeting self-imposed limits on management borrowing.

This is almost double the £15.4bn estimated by the OBR in October.

The assertion left the forecast for GDP growth in 2020 at 1.4% and now expects the UK economy to increase by 1.6% a year in the following three years.

Healthy public underwrites

The government is expected to borrow £22.8bn this financial year to cork the gap between the money it spends on public services and the tax revenues it collects.

This is nearly £3 billion lower than the £25.5bn predicted by the OBR in the October Budget.

The watchdog needs the improvement in the public finances to continue in future years, helped by stronger tax returns and lower spending on debt interest.

While borrowing is expected to bring into being to £29.3bn next year, it is then predicted to fall over the next four years.

Promote for public services

Mr Hammond announced a £800m increase in non-NHS dish out by the middle of the next decade to keep pace with inflation

In January the administration announced it would pump a similar amount into the NHS to maintain real-terms put in.

The chancellor also said he was making an additional £100m available upward of the course of the next year to help deal with the surge in pierce crime.

The cash is to be used for police overtime and to fund new ‘Violent Misdeed Reduction Units’ to help respond to the increase.

Student loans annoyance

Mr Hammond is expected to set out detailed plans about how money will be allocated to contrary government departments beyond 2020 in a spending review starting this summer.

On the other hand, changes to the way student loans are treated on the government’s books will eat away at the Brexit war trunk that Mr Hammond has set aside.

The changes, which reflect the fact that profuse students will never fully repay their loans, are had to reduce the pot of available cash by around £12bn this autumn.

The watchdog ventured this would also make an ongoing aspiration of eliminating the deficiency “harder to achieve”.

Robert Chote, the chairman of the OBR, said the Chancellor could feel for to the statistical shake up by changing his borrowing targets, or by tweaking other tax and splash out measures.

The government’s fiscal rules state that it must sustenance borrowing, adjusted for the ups and downs of the economy, below 2% of GDP in 2020-21.

The OBR denoted there was a 40% chance that the government would eliminate draw entirely by 2023/24.

Brexit costs

Mr Chote also highlighted that the OBR’s prophesies were based on a smooth Brexit, with employment expected to last steady and business investment predicted to rise.

He said the economic position remained uncertain, with the Spring Statement sandwiched between essential votes that will determine the UK’s exit from the EU.

Mr Chote suggested no deal would probably lead to a “short-term shock to the economy” which thinks fitting have implications for taxes and spending.

However, he said the hit to the country’s longer relationship growth prospects and UK living standards would be a bigger concern.

While Mr Chote put the government was likely to spend more money to support the economy, he said the mail effects of this on the economy were “presently unknowable”.

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