‘UK economy to grow faster than forecasts’

Bloomberg

Chancellor of the Exchequer Philip Hammond said the UK economy
will grow faster than previously forecast this year as he set the course
for government spending with Britain preparing to leave the European Union.
Opening his Budget speech in Parliament on Wednesday, Hammond said the Office for Budget Responsibility now sees 2017 economic growth of 2 percent compared with the 1.4 percent it predicted in November. That still lags the forecast of 2.2 percent made a year ago before Britain voted to quit the bloc. The budget deficit will be 51.7 billion pounds ($62.9 billion) for 2016-17, Hammond said, compared with the 68.2 billion pounds forecast in November. The OBR forecasts project a cut in borrowing of 23.5 billion pounds over the next five years.
Emphasizing that Britain is well placed to weather the challenges as Prime Minister Theresa May prepares to trigger formal talks with the EU later this month, Hammond said the OBR projects economic growth of 1.6 percent in 2018. Gross domestic product is forecast to rise by 1.7 percent in 2019.
The UK “has continued to confound the commentators with robust growth and a labor market delivering record employment,” Hammond told lawmakers in the House of Commons in London. “As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future,” he said. “We are building the foundations of a stronger, fairer, more global Britain.”
The pound was 0.2 percent lower at $1.2180 as of 1:06 p.m. London time. It earlier fell to $1.2139, the weakest since Jan. 17, the day of May’s major speech laying out her plans for Brexit.

CONTINUED AUSTERITY
In spite of the positive outlook presented by the chancellor, households are starting to feel squeezed by soaring food and fuel costs — the result of the depreciating pound — and Britons are facing years of continued austerity as Hammond seeks to balance the books in the next parliamentary term, which starts in 2020.
“We must focus relentlessly on keeping Britain at the cutting edge of the global economy,” Hammond said. “The deficit is down, but debt is still too high. Employment is up, but productivity remains stubbornly low.” Employment is set to continue to grow in every year of the forecast, Hammond said, citing the OBR estimates.
There was help for small traders hit by increases in business rates, an issue that has been repeatedly raised by lawmakers from Hammond’s own Conservative Party. Measures included caps on charges, discounts for 90 percent of pubs and a 300 million-pound fund for local governments to assist the hardest-hit businesses.
In pre-announced measures, the Treasury said cash has been earmarked for schools and technical training while extra funding is being channeled to innovation as part of measures to boost productivity.