- Debt forecast is 1% lower than previous projections, with debt at 85.6% of GDP in 2017/18
- In 2018/19 a small current surplus is due to occur, with borrowing only funding capital investment
- Borrowing is set to fall to 0.9% of GDP in 2022/23
- Debt is forecast to be at 77.9% of GDP in 2022/23, the lowest in 17 years
With the traditional ‘mini-budget’ being replaced by a shorter and less significant Spring Statement, the Chancellor of the Exchequer, Philip Hammond MP, today sought to appease those from all sides calling for greater expenditure on public services.
Criticism from the Labour Party and beyond of the Government’s ongoing commitment to austerity measures designed to reduce national debt levels and restore fiscal order has gained traction, particularly with more positive fiscal figures to play with.
Today the Commons saw confidence from the Chancellor, who is clearly pleased that he is able to announce that his Government’s controversial approach has been vindicated by good news. Growth and borrowing projections have been revised positively, yet with no major new spending or tax plans announced today he has instead promised to reward the country with additional spending in the Budget this Autumn.
If it were not for the duty of the Government to update the House twice per year on the state of the economy as per the Industry Act 1975, there would be little doubt that the Treasury would only push for one fiscal event per year. As such, this Statement is an attempt to project an image of political and economic stability since the tumultuous events of the the 2017 General Election and multiple cabinet reshuffles. It is also hoped that this will mean there is only pressure for spending increases and intra-Cabinet rows about departmental budgets once per year.
The extent to which it will avoid future rows and the avoidance of an opportunity to further destabilise the Brexit Government will be the most interesting aspect of this statement. However, the greater technical tests are whether it increases financial and economic stability, and whether the Shadow Chancellor John McDonnell’s criticism on the basis of “astounding complacency” dominate the airwaves and politics blogs given the lack of spending changes.
James Wharton, Senior Adviser at Hume Brophy said:
This ‘steady as she goes’ Spring Statement will help inject confidence and even a bit of optimism in the future of the UK economy. Hammond is sticking to his plan for one Budget in the Autumn. That means he has reserved some latitude to address any bumps in the road yet to come – a wise approach given the relative instability of global and national politics of late.