Amid uncertainty, UK Treasury chief to offer bleak outlook

Chancellor of the Exchequer Philip Hammond addressed Parliament earlier today with the plans, which will see rural business rate relief increased from 50 per cent to 100 per cent and the commitment to deliver more affordable housing and investment in local transport.

The government will invest 1.0-1.2 percent of GDP on economic infrastructure from 2020, up from 0.8 percent now, Hammond said.

The move toward higher borrowing represents a break with a yearslong focus on eliminating the budget deficit that has been central to Conservative-led government’s policies in the United Kingdom since 2010. But cracks are already appearing. These indicate growth of 2.1 per cent this year and 1.4 per cent next year with a medium term trend of about 2.0 per cent annual through to 2020.

Lib Dem MP Norman Lamb told HuffPost UK: “The OBR has set out in black and white the facts that Boris and other Vote Leave leaders can’t bring themselves to hear – immigration is good for our economy, and hard Brexit will make our country worse off”.

Growth is forecast to slow down, “which they attribute to lower investment and weaker consumer demand, driven, respectively, by greater uncertainty and by higher inflation resulting from sterling depreciation”.

While he conceded that the current government no longer seeks to deliver a surplus in 2019/20, he said public finances should return to balance as soon as possible in next public parliament.

Labour former minister Pat McFadden, a supporter of the Open Britain campaign calling for the United Kingdom to retain close links to the European Union, said: ” Today, the real picture of Britain’s post-Brexit economy emerged – borrowing up, growth down, investment lower, prices higher.

The Chancellor has always been said not to be a fan of the political grandstanding of his predecessors, which has seen the Autumn Statement, once a modest event known variously as the mini-Budget or pre-Budget report, grow into a major headline event. ‘This is unfair, and so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else’. The government will also tackle the “understandable public concern that the pitch is tilted in favor of large multinational groups which are able to use cross-border structures to manage their tax liabilities”.

Mr Hammond is also expected to announce a £1.4 billion injection into affordable housing to help build 40,000 new homes.

Some of the borrowing is the effect of the economic slowdown, but the breakdown of spending also shows that despite promising to make up for most of his new spending with tax rises, the chancellor is spending tens of billions of pounds more than Osborne – by delaying or cancelling some cuts and introducing some new spending. London will receive the bulk of the investment with 3.15 billion pounds being put aside for the building of over 90,000 homes in the capital. Part of the rise in yields, which gain as prices fall, followed the release of strong US economic data that sent global bond yields higher.

“Economically productive infrastructure directly benefits businesses”.

Mr Hammond will also confirm previously-announced investments of £1.3 billion on roads and £1 billion on broadband and digital infrastructure, as well as committing billions more to research and development projects created to support high-skill jobs.

The TUC countered that workers aged 24 and under would continue to be paid hundreds of pounds less.

Hammond offered a sweeping critique of the country’s economic landscape, and placed particular emphasis on the need to improve productivity, pointing out that the Germans, the French and the Italians had better productivity rates.

Bloomberg contributors: John Ainger, Namitha Jagadeesh and Lucy Meakin.