Bri­tain could be pay­ing into EU cof­fers un­til 2064

Imperial Valley Press - - SIX-DAY OUTLOOK - BY PAN PYLAS Bri­tain’s Chan­cel­lor Philip Ham­mond leaves in Par­lia­ment, in Lon­don, on Tues­day. AP Down­ing Street to de­liver his Spring State­ment

to in­clude fu­ture re­la­tions, no­tably trade.

In a bud­get up­date Tues­day, Trea­sury chief Philip Ham­mond said very lit­tle about the Brexit im­pact on the econ­omy but said he hoped for a “step for­ward” at next week’s meet­ing of EU lead­ers in Brus­sels.

Bri­tain wants the re­main­ing 27 EU na­tions to grant a tran­si­tion pe­riod af­ter Brexit, which the EU says should last un­til the end of 2020. Dur­ing the tran­si­tion, Bri­tain would re­main in the tar­iff-free sin­gle mar­ket and cus­toms union even though it will be out­side the EU and have lit­tle, or no, say over pol­icy changes.

The main point of the bud­get up­date was to pro­vide the OBR’s new fore­casts, which Ham­mond sought to paint in as rosy a light as pos­si­ble.

He said the Bri­tish econ­omy is set to grow 1.5 per­cent this year, up mod­estly on the pre­vi­ous 1.4 per­cent fore­cast but markedly be­low the coun­try’s long-run av­er­age. Growth is pre­dicted to re­main pal­try, 1.5 per­cent or lower in ev­ery year through to 2022.

“Fore­casts are there to be beaten,” Ham­mond said. “As a na­tion, we did it in 2017 and we should make it our busi­ness to do so again.”

In spite of the mod­est up­grade, the econ­omy is set to be one of the slow­est-grow­ing in the Group of Seven in­dus­tri­al­ized na­tions, as it was last year.

“Against a long term trend of at least 2 per­cent a year growth, af­ter poor growth since 2008, and com­pared with growth across rest of the OECD, these are not en­cour­ag­ing fore­casts,” said Paul John­son, di­rec­tor at the In­sti­tute for Fis­cal Stud­ies.

The Bri­tish econ­omy has slowed sharply since the coun­try voted to leave the EU in June 2016 as busi­nesses reined in in­vest­ment and con­sumer spend­ing eased af­ter in­fla­tion spiked fol­low­ing the pound’s fall, a de­vel­op­ment that raised the cost of im­ported goods such as en­ergy and food.

Brexit is the big­gest cloud hang­ing over the out­look. Bri­tain is due to leave the EU, its big­gest ex­port mar­ket, on March 29, 2019, but there is un­cer­tainty as to what the fu­ture trad­ing re­la­tion­ship will be.

In mak­ing its fore­casts, the OBR sought more clar­ity on what the gov­ern­ment an­tic­i­pates from Brexit. The agency fac­tored in a “smooth” Brexit process but said it will up­date its anal­y­sis as it is fur­nished de­tails of the with­drawal agree­ment, which is due to be ham­mered out by au­tumn.

Ham­mond made a point of laud­ing an im­prove­ment in pub­lic fi­nances. He said there is “light at the end of the tun­nel,” with pub­lic debt due to peak this fi­nan­cial year at 85.6 per­cent of GDP.

John McDon­nell, the Trea­sury spokesman for the op­po­si­tion Labour Party, said Ham­mond’s state­ment showed “just how cut off from the real world that he is.”

PHOTO/KIRSTY WIG­GLESWORTH

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