A brighter future?
Anyone watching Philip Hammond deliver his Spring Statement on Tuesday “will have observed a transformed figure”, said Alex Brummer in the Daily Mail. The Chancellor – dubbed Eeyore in the past because of his habitual pessimism – pronounced himself “positively Tigger-like” as he proclaimed upgraded forecasts for the economy and public finances. The economic growth projections from the independent Office for Budget Responsibility are “modest”, at 1.4% for 2018, and 1.3% for 2019. But at least the UK economy has resisted the widely predicted post-referendum recession – and the omens for the future are good. Employment is still at a historical high. Manufacturing has been boosted by the weak pound. And after long years of budgetary discipline, the Government is finally starting to pay its way. For the first time since 2002, it is running a daily surplus – receiving more in taxes than it spends. “That, in its own way, is a landmark moment given the £153bn annual deficit that George Osborne inherited from Labour in 2010.”
“So what now,” asked Matthew d’ancona in The Guardian. “Cakes and ale? A celebratory spending bonanza?” Sadly not. As Hammond put it earlier in the week, there is “light at the end of the tunnel”, but unfortunately, “we are still in the tunnel”. The national debt still stands at £1.8trn, or 86% of GDP. We’re nowhere near out of austerity yet. Even as the Chancellor made his statement, 11 million families were about to feel the pain of a £2.5bn cut in the benefits budget. The NHS is facing unprecedented budgetary pressure. Perhaps even more worrying, said Adam Boulton in The Sunday Times, is the state of local councils. According to the latest National Audit Office figures, local authorities have suffered a “staggering” 28.6% cut in real-term spending since 2010, while demand on services has increased steadily. “Whatever their political colour, councils are hitting the panic button.” Lord Porter, the Tory leader of the Local Government Association, thinks that councils “will have to continue to cut back services or stop some altogether”.
“Clearly, something has gone badly wrong,” said The Guardian. Back in 2010, the public accepted the necessity of austerity. But eight years on, we’re still enduring “the longest squeeze in living standards since the Napoleonic wars”. Average earnings are flatlining. And next year, when the country is meant to be mustering its resources to leave the EU, growth will be a measly 1.3%. But surely that’s the overriding point here, said Hamish Mcrae in The Independent. We should be relieved that the Government has got our national finances “under some sort of control”. At last, Hammond is “starting to have financial options”; he has hinted that he may increase public spending come the Autumn Budget. That’s the real message of the Spring Statement: “If the Government needs to spend money it will be able to do so, which is a good thing because it almost certainly will.”