Infrastructure key to UK’s first post-Brexit budget
LONDON: Britain’s first post-Brexit budget will focus on infrastructure and could spell an end to the previous government’s rigid fiscal targets, according to a treasury statement released yesterday. The budget will be new finance minister Philip Hammond’s first setpiece since replacing George Osborne who resigned following the June vote.
Under previous prime minister David Cameron, Osborne oversaw an austerity program of spending cuts and tax rises at odds with new premier Theresa May’s views on the economy which she has said no longer works for everyone. Hammond will promise to place “investment in infrastructure... at the heart” of Wednesday’s autumn statement to lawmakers, exactly five months after the referendum backing Brexit, the statement said.
Hammond will this week announce 1.3 billion pounds ($1.60 billion) in new spending on roads as part of his plans to bolster the economy as Britain prepares to leave the European Union, the Treasury said yesterday. Hammond’s first budget statement as chancellor of the exchequer on Wednesday will also commit to whittling down Britain’s large budget deficit, but he will also carve out some flexibility to allow him to spend more and offset any sharp slowdown in the economy.
Britain’s economy is so far faring better than expected after the vote to leave the EU, but growth is set to slow next year, limiting his options.
Measures to boost infrastructure and improve Britain’s weak productivity growth will be at the heart of the chancellor’s plan, the Treasury said, as Hammond aims to give some long-term support to the economy as Britain exits the EU. Last month, the Confederation of British Industry urged a boost in public investment to 2 percent of economic output, or an increase of around 6 billion pounds a year.
The Treasury said it had identified quick-turnaround infrastructure projects and upgrades to existing networks that would help to relieve road congestion, easing the commute for millions and boosting productivity. A spokeswoman for the Treasury said the money could be available as soon as the Transport Ministry wanted it. Hammond will also announce on Wednesday details of support to families that are struggling to get by, the Treasury said, echoing a pledge by Prime Minister Theresa May to address the financial frustrations of many voters who chose to leave the EU.
“He will set out how the government will fire up the nation’s economic infrastructure-all part of plans which form the backbone of ongoing work to close the UK’s productivity gap,” it added. The treasury statement also hinted at a loosening of Britain’s fiscal straightjacket, introduced by Osborne. Osborne’s austerity policies had intended to eliminate the budget deficit following the global financial crisis.