UK trade deficit hits record high
CHANCELLOR Philip Hammond suffered a triple whammy of setbacks yesterday ahead of next month’s Budget.
First, it was announced that Britain’s trade gap with the rest of the world had ballooned to a record high £14.2billion in August. Figures from the Office for National Statistics showed the UK exported £28.2billion worth of goods but imported £42.4billion. The widening gap dispels predictions that the weak pound since last year’s Brexit vote would boost exports by making UK-made goods cheaper abroad. Next, the Office for Budget Responsibility warned the country’s productivity would slow still further over the next five years, meaning the Government will rake in less than expected in tax.
That could, in turn, hit Hammond’s plans to loosen the purse strings in the Budget and any plans he has to balance the books.
Then the International Monetary Fund capped a bad day for the Chancellor by slashing their forecast for the economy.
The US-based body cut their prediction for growth this year by 0.3 per cent to 1.7 per cent, but kept their 2018 forecast at 1.5 per cent. The UK was the only major economy that failed to see growth revised higher by the IMF.
TUC general secretary Frances O’Grady said: “These forecasts are worrying. Brexit uncertainty is stifling growth and scaring off investors. “The Government need to start acting in the national interest and ignore those who want a kamikaze Brexit.” Labour’s Shadow Chancellor John McDonnell called the OBR’s report a “damning indictment of the last seven years of Tory economic failure”. He added: “We need no more proof that their austerity approach has failed to boost living standards or improve the long-term potential of the UK economy. “Next month’s Budget cannot be another exercise in kicking the can down the road by Philip Hammond. “We need to see substantial action.”