Chancellor must consider ‘significant’ Brexit risks

‘The Treasury needs to constantly monitor significant risks to public finances and be ready to react quickly’

PHILIP HAMMOND has been warned ahead of his Budget that the economy faces “significant risks” from Brexit because of the huge levels of borrowing by the Government.

The National Audit Office (NAO) said that Government debt has risen by almost two thirds over the past six years to £1.26trillion, equivalent to £47,000 for every household.

The interest payments on the UK’S debts have cost the Government £220billion over that period, increasing the risk posed by “unexpected deconsequences velopments”. It suggests that the Chancellor’s room for manoeuvre in his Budget on Nov 22 is likely to be significantly constrained.

Sir Amyas Morse, head of the NAO, said that uncertainty over Brexit and the aftermath of the of the financial crisis mean that the risk to the economy must be kept under review.

He said: “Put simply, public and private borrowing are high, kept affordable by record low interest rates, and quantitative easing continues 10 years after the crisis it responded to.

“There are significant risks to the public finances and any unexpected developments, potentially including of leaving the EU could exacerbate them.

“In these circumstances, the Treasury needs to constantly monitor these risks and be ready to react quickly and flexibly. It has taken steps to increase its capacity to respond.”

The report warned that managing public finances has become more difficult since the financial crash in 2008.

It said: “While there are strong shortterm political incentives to borrow rather than increase revenue from tax, the Government has to manage the risk that the stock of debt its borrowing builds up could become unsustainable.”