Hammond says can sustain high debt because of market credibility

Britain’s economic growth will slow sharply next year, Chancellor of the Exchequer Philip Hammond told Parliament yesterday in the government’s first Budget statement since the nation voted to exit the European Union.

As a result, Morgan Stanley thinks that longer-term growth will actually sit at something around 1.6%, rather than the 2.1% the OBR expects.

Commenting on the rising debt – which is expected to be more than 90 per cent of GDP by 2018 – Mr Vickers said he believed it was under control.

Hammand also announced the creation of a National Productivity Investment Fund, which aims to strengthen the slowing performance of the United Kingdom, providing 23 billion GBP innovation and infrastructure over the next five years.The measures announced by the Treasury before the speech of Hammond include 1.4 billion GBP for the construction of 40,000 new housing and easing of rules governing affordable housing funds.

Hammond pledged to reinvest £1bn of the efficiency savings found by government departments by 2020 in “priority areas”.

Attention will now turn to the Scottish Government’s spending plans, which are due to be published by Finance Secretary Derek Mackay on 15 December. Furthermore, the prospect of a sharp rise in inflation next year is expected to squeeze living standards. “The borrowing will be 3.5% this year, falling to 0.7% by 2021-22”. That would have meant that the United Kingdom public debt mountain would have stopped growing and the nation would take more responsibility for paying its way, rather than kicking the problem down the stream of time and having our descendants pick up the tab.

The newly-elected finance minister underlined that devolution continues to be at the government’s approach.

“At least then you stabilise things and people will be able to settle down into serious negotiations and we will get the best deal”. This means every city in Scotland will be on course to have one.

However there is a problem with that analysis, Morgan Stanley’s United Kingdom economics team, led by Jacob Nell say. He also said the A15 from Lincoln to Scunthorpe could benefit from the £1.3 billion set aside to improve regional connections.

The British Beer and Pub Association (BBPA) welcomed the plans, but said it had written to the Chancellor asking for broader reforms than were seen in today’s announcement.

Hammond says insurance premium tax will rise from 10% to 12%. “Our net inward migration assumption is unchanged since March, but we would have increased it by about 80,000 a year in the absence of the referendum”, said Chote. “A review of the regime could lead to increases in rates of relief for larger businesses, which are now entitled to less relief than smaller firms”.

“There will be a new penalty for people who use a tax avoidance scheme HMRC closes down”.

His criticism followed that of another eurosceptic lawmaker in Prime Minister Theresa May’s Conservative party, Jacob Rees-Mogg, who told BBC television that “experts, soothsayers, astrologers are all in much the same category”.