Hammond vows to beat forecast of five years of poor growth in the UK
THE UK’s sluggish economy looks set for more weak growth stretching out over the next five years, according to official forecasts, as the country heads for Brexit.
But UK Chancellor Philip Hammond, delivering a half-yearly update on the government finances, said the country’s budget forecasters expected the economy to expand by 1.5pc in 2018, up only a touch from a forecast of 1.4pc in November even though the world economy is growing strongly.
Growth forecasts in 2019 and 2020 were kept unchanged at 1.3pc and were cut for the following two years, according to the independent Office for Budget Responsibility, which judged a recent pick-up in pro- ductivity to be temporary.
Mr Hammond told parliament that he was aiming to prove the forecasters wrong.
Mr Hammond stressed he had to keep on bringing down Britain’s public debt levels but tried to focus on the positives, highlighting the OBR’s prediction of a return to growth in spending power for households in early 2019.
He also used his speech to attack the plans of the Labour Party to spend and borrow more.
“There is indeed light at the end of the tunnel,” Mr Hammond said in parliament, turning his gaze 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 train wreck.”
The UK economy has slowed sharply since the vote in June 2016 to leave the EU. Worryingly for Mr Hammond, the OBR said the economy was already running slightly faster than it could do without generating excessive inflation, even as it lagged behind its historic growth rates.
Earlier yesterday the Organisation for Economic Cooperation and Development (OECD) said Britain would grow more slowly than all the other Group of 20 leading economies this year, leaving it lagging behind the global recovery.
OECD acting chief economist Álvaro Pereira said this was as a result of Brexit.
“The uncertainty surrounding Brexit,yes,” Mr Pereira told the Irish Independent. The OECD is forecasting 1.3pc for 2018 and 1.1pc for next year.
“We revised up very marginally the growth outlook for this year from 1.2pc to 1.3pc because Europe is doing better and world trade is doing better.”
Despite the slow growth seen ahead for Britain, the UK government is on course to borrow £20.3bn less in cumulative terms between 2017/18 and 2022/23 than it predicted in November. (Additional reporting Reuters)
‘There is light at the end of the tunnel but we have to make sure it isn’t the shadow chancellor’s train’