Bri­tain bud­gets $330 mil­lion for Brexit

Busi­nesses rein in spend­ing as ‘cloud of un­cer­tainty’ hits econ­omy

Kuwait Times - - BUSINESS -

LON­DON: Bri­tain’s busi­nesses have reined in spend­ing as Brexit un­cer­tainty weighs, the gov­ern­ment said yes­ter­day, as it pledged £250 mil­lion ($330 mil­lion, 279 mil­lion euros) for de­part­ments to pre­pare the coun­try’s EU de­par­ture. Chan­cel­lor of the Ex­che­quer Philip Ham­mond told a cross-party panel of MPs that while the UK econ­omy was “fun­da­men­tally ro­bust”, Bri­tish busi­nesses and con­sumers were tight­en­ing their belts.

Ham­mond told the Trea­sury Se­lect Com­mit­tee that “the cloud of un­cer­tainty over cur­rent ne­go­ti­a­tions is act­ing as a tem­po­rary damp­ener and we need to re­move it as soon as pos­si­ble to make some progress.” “There is plenty of anec­do­tal ev­i­dence that busi­nesses and con­sumers are wait­ing to see what the out­come is be­fore firm­ing up in­vest­ment de­ci­sions and con­sump­tion de­ci­sions,” he added.

Speak­ing later in par­lia­ment, Prime Min­is­ter Theresa May said her Con­ser­va­tive gov­ern­ment was “com­mit­ting money to pre­pare for Brexit, in­clud­ing a no-deal sce­nario”. She added: “The Trea­sury has com­mit­ted over £250 mil­lion of new money to de­part­ments”, in­clud­ing those over­see­ing im­mi­gra­tion, trans­port and agri­cul­ture.

Yes­ter­day’s up­dates by the gov­ern­ment come a day after the In­ter­na­tional Mone­tary Fund said Bri­tain’s gross do­mes­tic prod­uct growth would slow to 1.7 per­cent this year from 1.8 per­cent in 2016 — and slow to 1.5 per­cent growth next year. The Euro­pean Union and Bri­tain clashed Mon­day after May said the ball was in the EU’s court as Brexit ne­go­ti­a­tions en­tered a crit­i­cal fifth round.

Talks have stalled on all three of the key di­vorce is­sues-the bill Bri­tain must pay for ex­it­ing the EU, the rights of the bloc’s cit­i­zens liv­ing in Bri­tain, and the fate of the bor­der be­tween the UK prov­ince North­ern Ire­land and eu­ro­zone mem­ber Ire­land.

The Of­fice for Bud­get Re­spon­si­bil­ity warned Tues­day that Bri­tish pro­duc­tiv­ity growth is lower than pre­vi­ously fore­cast, deal­ing a blow to May’s gov­ern­ment be­fore Ham­mond de­liv­ers the coun­try’s tax-and­spend plans in a key bud­get next month. The of­fice, Bri­tain’s fis­cal watch­dog, added that it would “sig­nif­i­cantly” re­duce its es­ti­mate for pro­duc­tiv­ity growth over the next five year­swhich will in turn hit fore­casts for eco­nomic growth and public fi­nances.

Pro­duc­tiv­ity refers to the av­er­age level of out­put pro­duced per worker or per hour. Ham­mond told the com­mit­tee yes­ter­day that is­sues hold­ing back pro­duc­tiv­ity growth in­clude un­der-de­vel­oped in­fra­struc­ture in the public sec­tor and a skills short­age among work­ers. But he also pointed to an is­sue he viewed as unique to Bri­tain com­pared to other lead­ing economies.

“We do have a fun­da­men­tal un­der­ly­ing prob­lem about pro­duc­tiv­ity growth in the UK econ­omy,” the chan­cel­lor told MPs. “The UK dis­tinc­tive is­sue is re­gional dis­par­ity. I’ve got no doubt in my mind that the stag­ger­ing dis­par­ity be­tween re­gional pro­duc­tiv­ity per­for­mance is a ma­jor drag on the UK econ­omy over­all. “It’s also a ma­jor so­cial is­sue for us in the UK. There is no other de­vel­oped econ­omy that has such a large pro­duc­tiv­ity per­for­mance gap be­tween its cap­i­tal city and its sec­ond and third city.” — AFP

LON­DON: Bri­tain’s Chan­cel­lor of the Ex­che­quer Philip Ham­mond arrives at Down­ing Street fol­low­ing Prime Min­is­ters’ ques­tion time at Par­lia­ment, in Lon­don yes­ter­day. — AFP

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