The UK chancellor Philip Hammond slashed the 2019 growth forecast in his Spring Statement and said future spending and economic wellbeing are dependent on an orderly Brexit.
Hammond announced that the Office for Budget Responsibility (OBR) had cut the country’s 2019 growth forecast to 1.2 per cent, down from the 1.6 per cent predicted in the autumn Budget.
However, Hammond said the OBR had improved further forecasts, predicting growth of 1.4 per cent in 2020, the same as its autumn forecast, and 1.6 per cent in 2021, up 0.2 per cent from the previous prediction.
On the deficit, the chancellor said borrowing will fall from £29.3bn in 2019-20 to £21.2bn the year after, bringing down the national debt to 82.2 per cent of GDP next year, Hammond said, and 79 per cent in 2020-21.
The figures represented a "major milestone on the road out of the crisis we inherited from Labour", whose economic plans "would send debt soaring", Hammond said.
In his responding statement, shadow chancellor John McDonnell said: “Labour left office having to bail out his mates in the City”. He said Hammond had shifted the deficit “onto the backs of many of the poorest in our society.”
Hammond warned that growth and debt reduction “will be at risk if we cannot secure a smooth and orderly exit from the EU”, and said that “leaving with no deal would mean significant disruption.”
However, he said that should a deal be agreed £26.6bn would be available to spend. This is thanks to increased tax receipts and lower spending, the OBR said.
The chancellor said the money is part of a “deal dividend” which would give the country “an economic boost from recovery in business confidence and investment”.
The new figure, his so-called Brexit war chest, gave Britain “real choices” on “how we would share it between increased spending on public services, capital investment in Britain's future prosperity and keeping taxes low”, Hammond said.
Among the new spending announced today was a £3bn Affordable Homes Guarantee Scheme to deliver around 30,000 new affordable homes, although the chancellor did not lay out a timeframe.
He said £717m would be made available from the Housing Infrastructure Fund to “unlock” 37,000 homes in West London, Cheshire, Didcot and Cambridge.
The announcement was “promising”, said KPMG’s UK head of housing Jan Crosby, “but we must not forget that we are playing catch-up and are nowhere near the aspiration to build 300,000 new homes each year.”
To fight the recent surge in knife crime, an additional £100m will be made available over the course of the year to police forces in England, ring-fenced to pay for additional overtime targeted specifically on knife crime and for new violent crime reduction units.
On the environment, Hammond announced the publication of proposals to require an increased proportion of green gas in the grid and the introduction of a future homes standard to mandate the end of fossil fuel heating systems in all new houses from 2025.
James Court of the Renewable Energy Association welcomed the news, saying it “has the potential to help remove some of the uncertainty surrounding the path to decarbonising heat, ensuring a clear plan for clean and cost-effective heating”.
Hammond announced more money for regions across the UK, with up to £260m for the Borderlands Growth Deal, a programme to boost the economy of the region, and £60m of investment for 10 cities across England, including Derby, Leicester and Plymouth.
To support the UK’s "technology revolution" the government will completely exempt PhD level roles from visa caps, Hammond announced, and invest £79m in Archer 2, a supercomputer to be hosted at Edinburgh University.
"I'm told with the right algorithms it might even be able to come up with a solution to the backstop", Hammond quipped.
Hammond also announced the government would tackle "period poverty" by funding free sanitary products for secondary schools and colleges from the next school year.
The chancellor also said the government will call on the Competition and Markets Authority (CMA) to undertake a study of the digital advertising market “as soon as possible”, and welcomed a report on competition in the digital marketplace, which recommends new powers for consumers and an overhaul of competition regulation.
Referencing the Labour party’s internal battles, he made an appeal to "many on the backbenches opposite" who he said "understand that a well-regulated market economy is the best, indeed the only, way to deliver a brighter future for our country".