Budget 2017: Hammond to miss deficit targets after big growth downgrade

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The Chancellor George Osborne Prepares To Give His Budget To Parliament
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The UK's national debt will peak this year before falling in 2018 but painful downgrades for economic growth mean chancellor Philip Hammond will miss his objective of eliminating the Budget deficit by 2025.

Robert Chote, head of the independent budget watchdog, the Office for Budget Responsibility (OBR), said the government's "longer-term objective of balancing the Budget also looks even more challenging now than it did in March."

Yet the chancellor found room to fund giveaways in his Budget over the next two years, faced with pressure to increase spending from opposition and his own party.

Chote described Hammond's plans as "a significant fiscal giveaway over the next two years".

Public sector debt will peak at 86.5 per cent as a percentage of GDP this year, before falling to 86.4 per cent in 2018, according to the OBR.

Debt will fall steadily to 79.1 per cent by 2022, the end of the Budget watchdog’s forecast period. If achieved, that would represent the lowest level of debt since April 2013.

Read more: Budget 2017: Government's economic forecasts revised down significantly

Hammond said it was “the first sustained decline in debt in 17 years.”

Government borrowing will reach £49.9bn in the current year, before dropping to £25.6bn in the 2022-23 fiscal year, the OBR said.

Hammond said the structural deficit, public sector borrowing adjusted for temporary fluctuations, will fall to 1.3 per cent of GDP in the 2020-21 fiscal year, giving £14.8bn headroom against the government’s two per cent target.

Read more: Autumn Budget 2017: Chancellor Philip Hammond's speech in full

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