Britain’s sluggish economy is heading for more weak growth over the next five years, according to official forecasts announced by chancellor of the exchequer Philip Hammond as the country heads for Brexit.
Mr Hammond, delivering a half-yearly budget update, said he remained focussed on reversing a sharp rise in public debt since the global financial crisis, and he turned his fire on the opposition Labour Party’s plans for higher spending and borrowing.
Despite a strong global recovery, the British economy is now expected to grow by 1.5% this year, just a touch higher than a forecast of 1.4% in November, the independent Office for Budget Responsibility (OBR) said.
Its forecasts in 2019 and 2020 were kept unchanged at 1.3% and were cut for the following two years, limiting Mr Hammond’s ability to loosen his grip on public spending later this year - something he hinted at again.
The average expected growth rate over the next five years is half the pace of before the 2007-2009 financial crisis.
The projections were below those of many private sector economists and Mr Hammond told the UK parliament he was aiming to prove the official ones wrong.“That’s the OBR’s forecast, Mr Speaker, but forecasts are there to be beaten,” he said.
Britain’s economy has slowed sharply since the vote in June 2016 to leave the EU.
Earlier, the Organisation for Economic Cooperation and Development said Britain would grow more slowly than all the other Group of 20 leading economies this year, leaving it lagging behind the global recovery.
Mr Hammond tried to focus on the positives in his new projections, saying an expected fall in debt as a share of the economy over the next five years was“a turning point” in Britain’s recovery from the crisis.
He also pointed to the OBR’s prediction of a return to growth in spending power for households soon, while keeping up his attacks on the opposition.
Labour delivered a huge election blow to the Tory government last year, winning enough support from voters frustrated with years of spending cuts and weak wage growth to deprive prime minister Theresa May of a parliamentary majority.
“There is indeed light at the end of the tunnel,” Mr Hammond said in parliament, turning his gaze across the chamber to John McDonnell, Labour’s would-be chancellor of the exchequer.
But we’ve got to make absolutely sure it isn’t the shadow chancellor’s train, hurtling out of control in the other direction, towards Labour’s next economic trainwreck.
Mr McDonnell, a self-proclaimed admirer of the ideas of Karl Marx and a veteran campaigner from Labour’s far left, accused Mr Hammond of astounding complacency.