This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2017/03/08/world/europe/top-uk-official-offers-cautiously-upbeat-outlook-for-economy.html

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Top U.K. Official Offers Cautiously Upbeat Outlook for Economy Philip Hammond, U.K. Finance Official, Cautiously Upbeat on Budget
(about 13 hours later)
LONDON — The British economy has outperformed expectations since last year’s vote to leave the European Union. In his annual budget presentation delivered Wednesday, the chancellor of the Exchequer, Philip Hammond, predicted the economy would continue to do so, giving him the flexibility to guard against the uncertainties that lie ahead as Britain leaves the European Union.LONDON — The British economy has outperformed expectations since last year’s vote to leave the European Union. In his annual budget presentation delivered Wednesday, the chancellor of the Exchequer, Philip Hammond, predicted the economy would continue to do so, giving him the flexibility to guard against the uncertainties that lie ahead as Britain leaves the European Union.
“Amongst the major advanced economies, Britain’s growth in 2016 was second only to Germany,” Mr. Hammond said in his address to Parliament. Yet, while revising his growth forecast upward, to 2 percent from 1.4 percent, and lowering borrowing forecasts, he cautioned there was “no room for complacency,” noting the country’s total debt of nearly $2 trillion.“Amongst the major advanced economies, Britain’s growth in 2016 was second only to Germany,” Mr. Hammond said in his address to Parliament. Yet, while revising his growth forecast upward, to 2 percent from 1.4 percent, and lowering borrowing forecasts, he cautioned there was “no room for complacency,” noting the country’s total debt of nearly $2 trillion.
Mr. Hammond’s primary task is to manage the possible economic fallout from Britain’s withdrawal from the European Union, known as Brexit. Its impact will depend largely on what sort of trade deal the government can negotiate with the remaining members of the bloc.Mr. Hammond’s primary task is to manage the possible economic fallout from Britain’s withdrawal from the European Union, known as Brexit. Its impact will depend largely on what sort of trade deal the government can negotiate with the remaining members of the bloc.
Mr. Hammond said the government would raise the amount that about 1.6 million self-employed Britons have to pay into social security, breaking an election promise but helping to build an economic defense against possible economic shock brought on by the British exit.Mr. Hammond said the government would raise the amount that about 1.6 million self-employed Britons have to pay into social security, breaking an election promise but helping to build an economic defense against possible economic shock brought on by the British exit.
Prime Minister Theresa May has said that Britain is likely to leave the bloc’s single market and — almost certainly — its customs union, which taken together dispense with customs checks at borders and allow for tariff-free trade in goods and many services.Prime Minister Theresa May has said that Britain is likely to leave the bloc’s single market and — almost certainly — its customs union, which taken together dispense with customs checks at borders and allow for tariff-free trade in goods and many services.
Mr. Hammond, who has been nicknamed “Spreadsheet Phil” for his businesslike demeanor, sought to liven his speech with several jokes. A favorite target was the opposition Labour Party and its embattled leader, Jeremy Corbyn, who the chancellor said “is now so far down a black hole that even Stephen Hawking has disowned him.”Mr. Hammond, who has been nicknamed “Spreadsheet Phil” for his businesslike demeanor, sought to liven his speech with several jokes. A favorite target was the opposition Labour Party and its embattled leader, Jeremy Corbyn, who the chancellor said “is now so far down a black hole that even Stephen Hawking has disowned him.”
Mr. Hammond, who announced money for driverless vehicles, noted dryly that this was “a technology that I believe the Labour Party knows something about.”Mr. Hammond, who announced money for driverless vehicles, noted dryly that this was “a technology that I believe the Labour Party knows something about.”
But he has a less showy style than his predecessor, George Osborne, who was fired when Mrs. May came to power after last year’s referendum on Britain’s future.But he has a less showy style than his predecessor, George Osborne, who was fired when Mrs. May came to power after last year’s referendum on Britain’s future.
A sober approach may be more appropriate now, given the uncertainty of the economic situation Britain faces, however. Britain is currently a full member of the European Union, but the government is expected to start exit negotiations later this month, setting the clock running on a two-year period to arrange an orderly withdrawal from the bloc.A sober approach may be more appropriate now, given the uncertainty of the economic situation Britain faces, however. Britain is currently a full member of the European Union, but the government is expected to start exit negotiations later this month, setting the clock running on a two-year period to arrange an orderly withdrawal from the bloc.
Under the plans outlined on Wednesday, Mr. Hammond created $31 billion of “headroom” that will give him the resources to stimulate the economy, should the exit negotiations founder, dragging down growth.Under the plans outlined on Wednesday, Mr. Hammond created $31 billion of “headroom” that will give him the resources to stimulate the economy, should the exit negotiations founder, dragging down growth.
“Beyond the next couple of years, the long-term economic and fiscal outlook will be heavily influenced by the post-Brexit relationship between the U.K. and the E.U.,” Kallum Pickering, an economist at Berenberg Bank in London, wrote in an analysis.“Beyond the next couple of years, the long-term economic and fiscal outlook will be heavily influenced by the post-Brexit relationship between the U.K. and the E.U.,” Kallum Pickering, an economist at Berenberg Bank in London, wrote in an analysis.
“The chancellor continues to take a low-risk approach to fiscal policy, setting generous fiscal targets with sufficient headroom in case growth slows by more than expected,” he added.“The chancellor continues to take a low-risk approach to fiscal policy, setting generous fiscal targets with sufficient headroom in case growth slows by more than expected,” he added.
Though Mr. Hammond pledged an additional $2.4 billion in spending over three years for social services, he balanced that commitment by increasing the rate of national insurance contributions — the name for the taxes that fund welfare programs and the state pension — paid by self-employed workers.Though Mr. Hammond pledged an additional $2.4 billion in spending over three years for social services, he balanced that commitment by increasing the rate of national insurance contributions — the name for the taxes that fund welfare programs and the state pension — paid by self-employed workers.
Currently, their contributions are levied at a lower rate. Mr. Hammond said that this was “not fair to the 85 percent of workers” who were not self-employed.Currently, their contributions are levied at a lower rate. Mr. Hammond said that this was “not fair to the 85 percent of workers” who were not self-employed.
However, the increase in national insurance appeared to be a breach of the manifesto of Mr. Hammond’s Conservative Party, which promised before the 2015 election that it would not increase the value-added tax, the income tax or the national insurance payments.However, the increase in national insurance appeared to be a breach of the manifesto of Mr. Hammond’s Conservative Party, which promised before the 2015 election that it would not increase the value-added tax, the income tax or the national insurance payments.
The budget also included tax increases affecting some company owners and investors, as well as aid for some businesses, including all but the largest pubs.The budget also included tax increases affecting some company owners and investors, as well as aid for some businesses, including all but the largest pubs.
The spending plan was criticized by John McDonnell, the shadow chancellor from the opposition Labour Party, who described the national insurance changes as an “unfair” attack “on the self-employed low- and middle-earners.”The spending plan was criticized by John McDonnell, the shadow chancellor from the opposition Labour Party, who described the national insurance changes as an “unfair” attack “on the self-employed low- and middle-earners.”
“Instead of equipping our country for Brexit, he is building our economy on sand,” Mr. McDonnell said in a statement.“Instead of equipping our country for Brexit, he is building our economy on sand,” Mr. McDonnell said in a statement.
Mr. Pickering argued that, despite the positive economic news so far, Britain’s exit from the European Union would still impose significant costs on the economy and could reduce the country’s long-term potential growth rate to 1.8 percent from 2.2 percent. “An increase in spending on projects designed to boost productivity and raise trend growth would be well timed,” he added.Mr. Pickering argued that, despite the positive economic news so far, Britain’s exit from the European Union would still impose significant costs on the economy and could reduce the country’s long-term potential growth rate to 1.8 percent from 2.2 percent. “An increase in spending on projects designed to boost productivity and raise trend growth would be well timed,” he added.
Overall, when compared with forecasts made last year — before the referendum — by Britain’s independent Office for Budget Responsibility, “Brexit looks still set to cost the taxpayer at least $120 billion,” he wrote.Overall, when compared with forecasts made last year — before the referendum — by Britain’s independent Office for Budget Responsibility, “Brexit looks still set to cost the taxpayer at least $120 billion,” he wrote.