{"id":3763,"date":"2018-10-30T00:00:47","date_gmt":"2018-10-30T00:00:47","guid":{"rendered":"http:\/\/www.styledeals.co.uk\/blog\/budget-2018-philip-hammond-hails-better-borrowing-figures\/"},"modified":"2018-10-30T00:00:47","modified_gmt":"2018-10-30T00:00:47","slug":"budget-2018-philip-hammond-hails-better-borrowing-figures","status":"publish","type":"post","link":"https:\/\/www.styledeals.co.uk\/blog\/budget-2018-philip-hammond-hails-better-borrowing-figures\/","title":{"rendered":"Budget 2018: Philip Hammond hails better borrowing figures"},"content":{"rendered":"\n
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Chancellor Philip Hammond has used the Budget to ease the government spending squeeze as he declared that austerity was “finally coming to an end”.<\/p>\n

Against a backdrop of stronger tax receipts, Mr Hammond said borrowing this year would be \u00a311.6bn lower than projected in March, at \u00a325.5bn.<\/p>\n

Borrowing is expected to keep falling over the next five years. <\/p>\n

Mr Hammond said day-to-day spending budgets were now expected to grow by around 1.2% a year from 2019.<\/p>\n

This is up from an average contraction of 1.3% in the last Spending Review in 2015.<\/p>\n

How is the government easing austerity?<\/h2>\n

Bumper tax receipts and a stronger jobs market helped Mr Hammond to land a \u00a368bn borrowing windfall over the next five years.<\/p>\n

A healthier outlook for the public finances means the Treasury can fund a multi-billion pound boost for the NHS, as well as more money for defence, schools, welfare and above-inflation rises in the income tax personal allowance<\/a>.<\/p>\n

The Office for Budget Responsibility (OBR) said the spending promises represented the biggest Budget giveaway since the independent fiscal watchdog was set up in 2010.<\/p>\n

When will the government eliminate public borrowing?<\/h2>\n
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Healthier public finances means the government could have used its borrowing windfall to eliminate the deficit in five years time.<\/p>\n

It chose not to.<\/p>\n

The OBR said its downward revision to underlying borrowing over the next five years was the biggest since 2013.<\/p>\n

On its own, this would have been enough to achieve a budget surplus of \u00a33.5bn in 2023-24, meeting the government’s goal of balancing the books by 2025.<\/p>\n

By choosing to spend most of the windfall instead, the OBR described this goal of balancing the books as “challenging from a variety of perspectives”.<\/p>\n

It added that Mr Hammond faced a stark choice: keep borrowing or cut spending.<\/p>\n

The OBR calculated that if the deficit kept falling at the same pace beyond 2023-24 as in the coming four years, the government would be on course to balance the books in 2028-29.<\/p>\n

However, this would mean spending on government departments would need to starting falling again per head in real terms. <\/p>\n

Torsten Bell, director of the Resolution Foundation think-tank, said the government’s target for a budget surplus had effectively been “abandoned”.<\/p>\n

He tweeted: “Borrowing is basically being held at just over \u00a320bn forever.”<\/p>\n

What is the outlook for growth?<\/h2>\n

The government’s independent fiscal watchdog left its forecasts for economic growth broadly unchanged.<\/p>\n

The OBR said the UK economy was expected to grow by 1.3% in 2018.<\/p>\n

While this is slightly lower than the 1.5% growth predicted in March, economic growth is expected to rise to 1.6% in 2019, up from a previous projection of 1.3%.<\/p>\n

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Mr Hammond said wages were currently growing at their fastest pace in a decade.<\/p>\n

Britain’s unemployment rate is now expected to fall to a fresh four-decade low of 3.7% next year, with a strong jobs market expected to boost economic growth and tax revenues.<\/p>\n

Healthier public finances are expected to keep Britain’s debt share falling over the next five years, helping the government to meet two key fiscal rules.<\/p>\n

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How will Brexit affect the economy?<\/h2>\n

Mr Hammond signalled that a good Brexit agreement would enable the Treasury to spend a “double deal dividend”.<\/p>\n

He said the economy would receive a boost from the end to uncertainty over Britain’s future relationship with the EU, and a good deal with the EU would also free up money set aside to protect the economy in the event of no deal.<\/p>\n

Is it the end of austerity?<\/h2>\n

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said government policy was now expected to boost economic growth next year for the first time since 2014. <\/p>\n

But Robert Chote, the chairman of the OBR, suggested that it was too early to say austerity was over.<\/p>\n

He said the overall package of measures had a “familiar Augustinian pattern of a near-term giveaway followed by a longer-term takeaway”, increasing borrowing by \u00a35.3bn in 2019-20 but reducing it by \u00a30.2bn by 2023-24.<\/p>\n

Mr Hammond wants to maintain the size of his Brexit war chest which he has set aside to protect the economy from any shock in the event of no deal.<\/p>\n

Mr Tombs said: “The chancellor could have announced higher spending for 2020-21 and beyond, but he is keeping some ammunition in the locker in case the economy needs emergency support.”<\/p>\n

A four-year freeze on working-age benefits will also continue.<\/p>\n

John Hawksworth, chief economist at PwC, added that while overall day-to-day spending is set to increase over the next five years, departments would have to wait until next year to find out if any departments still faced spending cuts.<\/p>\n

He said: “We will have to wait until the Spending Review next year to make a final judgment as to whether austerity is really coming to an end.”<\/p>\n<\/p><\/div>\n


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Image copyright Getty Images Chancellor Philip Hammond has used the Budget to ease the government spending squeeze as he declared that austerity was “finally coming to an end”. Against a backdrop of stronger tax receipts, Mr Hammond said borrowing this year would be \u00a311.6bn lower than projected in March, at \u00a325.5bn. Borrowing is expected to … <\/p>\n","protected":false},"author":0,"featured_media":3764,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3763","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts\/3763","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=3763"}],"version-history":[{"count":0,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts\/3763\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/media\/3764"}],"wp:attachment":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=3763"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=3763"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=3763"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}