UK sees brighter 2017

Britain has raised its forecasts for economic growth this year but is more downbeat about the following three years, finance minister Philip Hammond said in the first full budget since the referendum decision to leave the European Union. Delivering his budget statement just weeks before Prime Minister Theresa May is expected to kick off the process of leaving the EU, Hammond said Britain’s economy had “continued to confound the commentators” with its growth in 2016.

“As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future,” Hammond told parliament. “It provides a strong and stable platform for those negotiations.” Britain’s economy is now expected to grow by 2.0 percent in 2017, up sharply from a forecast of 1.4 percent made in the latest round of official forecasts in November, according to the Office for Budget Responsibility (OBR).

However, the growth outlook for this year remained lower than a forecast of 2.2 percent made a year ago, before the unexpected Brexit vote which is expected to weigh on the economy in the years ahead. Furthermore, the forecasts for growth 2018, 2019 and 2020 were lowered from November’s outlook. Hammond has previously said that rather than use the better outlook to spend more, he will focus on eliminating what remains one of the biggest budget deficits among the world’s rich nations, something he is aiming to do in the first half of the next decade.

Hammond, nicknamed ‘Spreadsheet Phil’ for his unflashy approach to running the economy, wants to build up a reserve fund in case he needs to help Britain’s economy through a Brexit slowdown ahead. The Brexit vote in June, which will separate Britain from the EU which buys about half of its exports, had been expected to deliver a quick and heavy below to the economy. Instead, consumers continued to spend heavily and helped the economy to grow by 1.8 percent, faster than all other Group of Seven economies in 2016 bar Germany. — Reuters