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| Budget 2017: Philip Hammond downgrades UK economic growth while Brexit takes place | Budget 2017: Philip Hammond downgrades UK economic growth while Brexit takes place |
| (35 minutes later) | |
| The Chancellor was forced to slash his official economic growth forecasts while the Brexit talks take place, as he delivered his first Budget. | The Chancellor was forced to slash his official economic growth forecasts while the Brexit talks take place, as he delivered his first Budget. |
| Philip Hammond told MPs that Britain’s economy would grow faster than previously expected in the next financial year – by two per cent, up from 1.4 per cent. | Philip Hammond told MPs that Britain’s economy would grow faster than previously expected in the next financial year – by two per cent, up from 1.4 per cent. |
| But he said the independent Office for Budget Responsibility (OBR) now expected lower growth in 2018-19 (1.6 per cent), in 2019-20 (1.7 per cent) and in 2020-21 (1.9 per cent). | But he said the independent Office for Budget Responsibility (OBR) now expected lower growth in 2018-19 (1.6 per cent), in 2019-20 (1.7 per cent) and in 2020-21 (1.9 per cent). |
| It means the British economy is now expected to grow at a slower rate than before the Brexit referendum, all the way through to EU withdrawal and beyond. | It means the British economy is now expected to grow at a slower rate than before the Brexit referendum, all the way through to EU withdrawal and beyond. |
| Britain can no longer claim to be the fastest-growing in the G7 group of the largest economies, but is now “second only to Germany”, the Chancellor said. | |
| However, Mr Hammond said real wages are forecast to rise in every year of the period – which means workers would feel better off. | However, Mr Hammond said real wages are forecast to rise in every year of the period – which means workers would feel better off. |
| During his speech, the Chancellor also announced: | |
| * Inflation is forecast to be 2.4 per cent this year, two per cent next year and two per cent in 2019 – so above the Bank of England's two per cent inflation target for three years. | |
| * Borrowing this year will be £16.7bn lower than originally forecast at £51.7bn, falling to £48.3bn in 2017-18, then £40.8bn, £21.4bn and £20.6bn in 2020-21. | |
| * Debt is forecast to be 86.8 per cent this year, peaking at 88.8 per cent next year - 1.4 per cent lower than forecast. | |
| * The National Living Wage will rise again to £7.50 in April. | |
| * The rate of Class 4 National Insurance Contributions for the self-employed will rise by one per cent to ten per cent from April 2018, with a further one per cent increase in 2019. | |
| That immediately sparked criticism that the Chancellor had explicitly broken the 2015 Tory general election manifesto pledge not to raise direct personal taxes. | |
| The Chancellor dismissed arguments that the lower borrowing forecasts should mean “more unfunded spending” – warning “each year, we are spending £50bn on debt interest”. | |
| The only responsible course of action, he argued, was to continue with austerity, saying: “We will not saddle our children with ever-increasing debts.” |