U.K.'s Hammond Announces Sharp Cuts to Economic Forecasts -- Update
November 22 2017 - 9:42AM
Dow Jones News
By Jason Douglas
LONDON--U.K. Treasury chief Philip Hammond on Wednesday
presented gloomier forecasts for the economy, in a budget address
to Parliament that earmarked an extra GBP3 billion ($3.97 billion)
over the next two years to prepare for the country's departure from
the European Union.
Presenting his latest tax-and-spending plans to lawmakers, Mr.
Hammond also offered a variety of sweeteners to voters weary after
years of government belt-tightening. A particular focus was the
young: He pledged billions of pounds in tax breaks and government
loan guarantees to spur housebuilding over the next five years amid
concern over high prices, and said those between 26 and 30 years of
age would get subsidized rail travel.
The pitch to voters represents an effort to revive the ruling
Conservatives' fortunes after they lost their parliamentary
majority in a snap election in June. Prime Minister Theresa May has
since struggled to stamp her authority on a government roiled by
resignations and riven by infighting over the terms of the U.K.'s
departure from the EU.
Mr. Hammond sought to present an upbeat picture of the U.K.'s
prospects after it leaves the EU in 2019, saying its economy is
dynamic, innovative and poised to benefit from new technologies
such as driverless cars and artificial intelligence.
"Those who underestimate Britain do so at their peril," he
said.
But his tone contrasted with pessimistic forecasts for the
economy produced by the Office for Budget Responsibility, the
U.K.'s fiscal watchdog. The agency said it expects economic growth
to slow from 1.5% this year to just 1.3% in 2019, compared with
March projections of growth of 2% and 1.7%, respectively.
The downbeat prognosis reflects a reassessment by the OBR of the
U.K.'s prospects for productivity growth in the years ahead
following repeated disappointments.
The GBP3 billion earmarked for Brexit preparations over the next
two years is aimed in part at soothing Brexit supporters' concern
that not enough is being done to prepare for a disorderly end to
negotiations with the EU.
The money comes on top of some GBP700 million of funding
provided to government departments to date. A Treasury spokesman
said departments will be able to bid for the cash to finance new
infrastructure needed after Brexit, such as immigration
systems.
Write to Jason Douglas at jason.douglas@wsj.com
(END) Dow Jones Newswires
November 22, 2017 10:27 ET (15:27 GMT)
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