British chancellor Philip Hammond moved yesterday to put flesh on the bones of his promise of a “fiscal reset” following Brexit, unveiling a raft of spending measures aimed at boosting the country’s economy.
He unveiled a large fund for infrastructure, saying he was also helping out the financially hard-pressed.
Investment in science and technology and house building have been prioritised, with monies set aside to promote enterprise in the English regions.
Nicknamed ‘spreadsheet Phil’, the chancellor is known to attach the highest priority to infrastructural investment as a means of tackling Britain’s sluggish productivity performance.
He has watered down his predecessor George Osborne’s commitment to balance the budget, a move criticised by those opposed to austerity.
Mr Hammond has promised merely a return to balance “as soon as possible”, though he tickled his party’s hard-right wing with an announcement of £3.5bn (€4.1bn) in promised efficiencies.
Almost £500m has been set aside by him to help the civil service prepare for Brexit, with April 2019 penciled in as the final departure date.
He also confirmed that the UK would have two budgets in the coming year as a result of the shift to an autumn budget.
However, Mr Hammond also further increased the tax on insurance premiums, provoking fury in the sector, while estate agents will no longer be allowed to charge up-front commission when letting property.
People with young families may benefit from greater aid for childcare, while the marginal tax on the income of those returning to work from welfare falls from 65% to 63%, in a move designed to tackle the so-called tax wedge.
He released a markedly downbeat UK growth forecast, prepared by the independent forecaster, the Office for Budget Responsibility.
UK borrowing over the next five or six years will be £122bn higher than envisaged by Mr Osborne.
The country’s national debt is now forecast to hit £2 trillion by 2020 or 2021.
Mr Hammond’s autumn statement comes just days after an upbeat address to the Confederation of British Industry by the Prime Minister Theresa May.
She appeared in that speech to commit to an acceleration in the reductions in the UK headline corporation tax rate, first proposed by Mr Osborne.
Under Mr Osborne’s plan, the rate is due to fall to 17% in stages by 2021, heaping added pressure on the Government here.
The big question is whether a policy of slashing corporation taxes to woo inward investment can be justified as the UK’s fiscal outlook worsens.
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