UK austerity ending, as long as Brexit deal gets done: Hammond

By William Schomberg, David Milliken and Andy Bruce LONDON (Reuters) - British finance minister Philip Hammond held out the prospect on Monday of an end to austerity provided the government secures a Brexit deal with the EU, putting pressure on rebels in the ruling Conservative Party to back Prime Minister Theresa May. Delivering his annual budget speech to parliament, Hammond announced a fall in Britain's expected borrowing needs between now and the mid-2020s, as well as a series of measures to increase public spending and cut taxes for households. 'When our EU negotiations deliver a deal, as I am confident they will, I expect that the 'Deal Dividend' will allow us to provide further funding,' Hammond said

Reuters October 30, 2018 00:05:52 IST
UK austerity ending, as long as Brexit deal gets done: Hammond

UK austerity ending as long as Brexit deal gets done Hammond

By William Schomberg, David Milliken and Andy Bruce

LONDON (Reuters) - British finance minister Philip Hammond held out the prospect on Monday of an end to austerity provided the government secures a Brexit deal with the EU, putting pressure on rebels in the ruling Conservative Party to back Prime Minister Theresa May.

Delivering his annual budget speech to parliament, Hammond announced a fall in Britain's expected borrowing needs between now and the mid-2020s, as well as a series of measures to increase public spending and cut taxes for households.

"When our EU negotiations deliver a deal, as I am confident they will, I expect that the 'Deal Dividend' will allow us to provide further funding," Hammond said.

"The hard work of the British people is paying off. Austerity is coming to an end."

May said earlier this month that the government's austerity push was coming to an end.

Hammond said a deal would lift uncertainty about Britain's ties to the European Union and he would be able to use money he has set aside to help the economy through the shock of a no-deal Brexit.

"We are confident that we will secure a deal which delivers that dividend," he said. "Confident, but not complacent. So we will continue to plan for all eventualities."

Hammond -- who routinely angers many Conservative lawmakers by calling for close ties with the EU -- said on Sunday he would have to reverse the plan for higher spending in the event of an economically damaging no-deal Brexit in March.

May has so far failed to rally the Conservatives behind her Brexit strategy, raising concerns that Britain could leave the EU without a transition deal.

Britain's economy has slowed since the 2016 referendum when Britons voted to leave the EU, but not as much as many economists had feared. However, debt levels remain high, limiting how much Hammond can relax his spending squeeze.

He has said the biggest increase in spending in his budget was announced when May said four months ago that more money would go to the health service.

HELP FOR RETAILERS, TAX FOR BIG TECH FIRMS

On Monday, Hammond announced a new digital services tax on the revenues of large tech firms which would raise 400 million pounds ($510 million) a year from 2020 as well as measures to help small retailers.

He also said he was taking measures to ease the hit on working households from a reform of welfare payments.

The budget deficit was set to stand at 1.2 percent of gross domestic product in the current financial year, down from a forecast in March of 1.8 percent, he said.

In total, borrowing was forecast to be 18.5 billion pounds lower between now and the 2022/23 financial year than in the March forecasts by the independent Office for Budget Responsibility which underpin the budget..

Hammond and his predecessor George Osborne have made fixing the public finances their priority.

The deficit has fallen from almost 10 percent of GDP in 2010, thanks largely to big cuts to spending for a range of government departments and a squeeze on welfare.

But Hammond is likely to struggle to meet his target of wiping out the deficit altogether by the mid-2020s if he does not raise taxes, economists have said.

He told parliament that by the 2023/24 financial year, the deficit was expected to be 0.8 percent of GDP.

Hammond has also set himself a target of bringing down public debt, which has doubled as a share of GDP from before the global financial crisis as the government borrowed heavily.

Hammond said the OBR's forecasts showed debt as a ratio of GDP was due to fall each year.

The OBR raised its forecasts for economic growth for next year to 1.6 percent, compared with its forecast of 1.3 percent made in March. The 2020 growth forecast was raised less sharply to 1.4 percent and maintained at 1.4 percent for 2021.

($1 = 0.7815 pounds)

(editing by David Stamp)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.