Spring statement: Poor growth gives little reason for optimism


The Office for Budget Responsibility's spring report shows that Philip Hammond's upbeat statement that there is "light at the end of the tunnel" for the United Kingdom economy after years of austerity is based nearly entirely on an improved global economy rather than any domestic improvement.

Prime Minister Theresa May's Conservative government had made "solid progress towards building an economy that works for everyone", the chancellor continued. The chancellor says the real wage will start to rise by the first quarter of next year.

"We heard a lot of statistics being reeled off, with the government pleased to announce debt is falling and forecasts apparently being revised upwards".

"That is a turning point in this nation's recovery from the financial crisis a decade ago", said Mr Hammond.

He said he expects inflation to fall back to the Bank of England's target level of 2 per cent in 2018.

What's the story on economic growth?

In today's Spring Statement, Hammond said the government would launch an investment programme of at least £44 billion over the next five years was announced at Autumn Budget 2017, "putting us on track to raise the supply of homes to 300,000 a year on average by the mid-2020s".

Growth is expected to meet the OBR's existing forecasts in 2019 and 2020 of 1.3%, but estimates have been downgraded in 2021 from 1.5% to 1.4%, and in 2022, from 1.6% to 1.5%.

The OBR said: "The economy has slightly more momentum in the near term, thanks to the unexpected strength of the world economy, but there seems little reason to change our view of its medium-term growth potential". The unemployment rate is close to a 40-year low.

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The 1.3 per cent forecast for 2019/2020 remains unchanged, as does the 1.5 per cent forecast for 2020.

Yet, with the Chancellor reiterating its commitment to devolution and empowering metro-mayors to lead the regional growth agenda, it's even more vital that Yorkshire - and the Government - reaches a consensus sooner rather than later.

Despite revealing the smallest budget deficit since 2002, Mr Hammond had already said the national debt was too high and that it would be wrong to put "every penny" into more public spending.

It comes as the chancellor hinted he will turn on the spending tap in this autumn's budget after positive public finance figures pointed to "light at the end of the tunnel" following years of austerity.

Between 2021 and 2028, the United Kingdom will pay "reste à liquider" (budgetary commitments) of £18.2 billion, and a further £2.5 billion will be handed over between 2019 and 2064, largely pension commitments.

Here are six things we learned from the Chancellor's statement and the analysis that followed.

On Brexit Mr Hammond said only that he and his colleagues are "preparing for all eventualities".

However, he added: "We should not get carried away".