Philip Hammond restates commitment to slash UK corporation tax to 17% in four years

The UK will keep to planned cuts in corporation tax to 17% by 2020 to help spur growth, as chancellor Philip Hammond unveiled budget investments for infrastructure, including roads, rail and high-speed broadband, to help boost productivity as Britain heads for its divorce from the EU.

Shares in British housebuilders briefly turned positive in choppy trade after he outlined plans to support further construction through infrastructure funds and packages to help homebuyers.

Mr Hammond said he was setting up a £2.3bn (€2.7bn) housing fund to deliver infrastructure for up to 100,000 new homes in areas of high demand, with a further £1.4bn to help construct 40,000 affordable homes.

The chancellor also said there would be a regional pilot scheme to give housing association tenants the right to buy their homes, as well as continued support for people looking to use mortgages to buy.

But Mr Hammond laid out a somber framework for post-Brexit Britain, slashing the forecast for economic growth in 2017 and saying the British government will need to borrow more over the next five years partly as a result of the vote to leave the EU.

Outlining his autumn statement, five months to the day after Britain opted to quit the EU, Mr Hammond said the Office for Budget Responsibility now sees UK economic growth next year of 1.4% instead of the 2.2% forecast in March.

The cumulative budget deficit will also widen, a direct result of the referendum result, the UK treasury said.

Sterling briefly rose against the dollar but the gains “were rapidly wiped out” soon after, senior analysts at IG, an online trader, said. Sterling rose by almost 1% against the euro at one stage, to 84.8p, which may help ease the pressure on Irish exporters selling goods and services across the Irish Sea.

The vote to leave the EU “will change the course of Britain’s history,” Mr Hammond told the House of Commons.

“But it’s a decision that also makes more urgent than ever the need to tackle our economy’s long-term weaknesses,” including a productivity gap, a housing shortage and a “damaging imbalance in economic growth and prosperity,” he said.

“Our task now is to prepare our economy to be resilient as we exit the EU and match-fit for the transition that will follow.”

“The productivity gap is well known, but shocking nonetheless,” he said. “It takes a German worker four days to produce what we make in five, which means, in turn, that too many British workers work longer hours for lower pay than their counterparts.”

Opposition lawmakers poured scorn on the measures. Mr Hammond’s statement “highlights the damage that Brexit will likely cause,” said James Knightley, an economist at ING Bank in London.

“We are more pessimistic on GDP growth than the government” and expect borrowing to be higher, he said.