Hammond talks up economy despite Brexit ‘cloud of uncertainty’

Brexit is casting a “cloud of uncertainty” over the British economy, Philip Hammond admitted, after MPs rejected Theresa May’s deal and the Budget watchdog slashed growth forecasts.

The Chancellor said the Office for Budget Responsibility has forecast growth of 1.2% this year – a downgrade from the 1.6% forecast at the Budget in 2018.

Delivering his Spring Statement, Mr Hammond told MPs: “Last night’s vote leaves a cloud of uncertainty hanging over our economy.

“And our most urgent task in this House is to lift that uncertainty.”

But he insisted the economy remained “remarkably robust”.

Spring Statement
Spring Statement

The OBR forecast growth of 1.2% this year, 1.4% next year and 1.6% in the following three years.

Mr Hammond said: “Cumulative growth over the five years is now slightly higher than the Budget forecast.”

The Chancellor said there was “good news” on the public finances, with borrowing this year 1.1% of GDP – £3 billion lower than forecast at the Autumn Budget – and forecast to reach £13.5 billion in 2023/24, its lowest level in 22 years.

Debt is forecast to be lower in every year than predicted at the Budget, falling to 82.2% of GDP next year, then 79%, 74.9% and 74% in the following years and 73% in 2023/24.

The Chancellor said he will decide in the Spending Review later this year how to share the proceeds from any Brexit “Deal Dividend”, between increased spending on public services and capital investment, and keeping taxes low.

But he warned: “Leaving with no deal would mean significant disruption in the short and medium-term and a smaller, less prosperous economy in the long-term, than if we leave with a deal.

“Higher unemployment; lower wages; higher prices in the shops. That is not what the British people voted for in June 2016. “