Chancellor denies abandoning deficit target
CHANCELLOR PHILIP Hammond has denied abandoning his target of eliminating the UK’s deficit by the middle of the next decade.
Following his ‘giveaway’ Budget last week, experts said any suggestion the Chancellor still intended to meet his fiscal objective of reaching surplus by the mid2020s was “for the birds”.
But he told the House of Commons Treasury Committee that the goal of balancing the nation’s books was “within touching distance”, with the Office for Budget Responsibility forecasting the deficit will be trimmed to 0.8 per cent of GDP by 2023/24.
Rather than making reducing the deficit the overriding goal of economic policy, it would be a matter for the Chancellor at each Budget over the next few years to strike a balance between getting borrowing down and other priorities like cutting taxes, increasing public spending and investing in the national infrastructure, he suggested.
Mr Hammond’s third Budget included increased spending totalling around £100bn, in what was seen by many observers as a mark that the age of austerity was coming to a close.
The director of respected economic think tank the Institute for Fiscal Studies, Paul Johnson, said: “Any idea that there is a serious desire to eliminate the deficit by the mid-2020s is surely for the birds.”
But Mr Hammond denied that he had given up his target, set in autumn 2016, to reach a budget surplus “as soon as practicable”.
“It hasn’t been abandoned,” he told the cross-party committee.
“I have said since the autumn of 2016 that I would take a balanced approach.”
This involved “recognising the need to reduce and ultimately eliminate the deficit in order to get debt falling sustainably – something we have now achieved – but also the need to support our public services, keep taxes low and, crucially, to invest in infrastructure, skills, training, research and development and support the future productivity of our country”, he said.
“That is the only way we are going to get sustainable real growth in incomes.”