Spring Statement: UK GDP revised up for 2018

Philip Hammond on aThe Andrew Marr Show

With the end of a rather long dark winter for British consumers coming to an end, the chancellor came as close as anyone has in signalling an end of austerity, declaring emphatically there is "light at the end of the tunnel".

"A lot will depend on what happens with sterling and oil prices, and with retailers suffering so much the temptation to put up prices to mitigate lower volumes will be strong, and that's before you consider the impact of the incoming living wage".

Calling on the nation to do even better than predicted, the Chancellor said: "That's the OBR's forecast - but forecasts are made to be broken".

As expected, there were no new tax and spending announcements, Mr Hammond explaining this would bring the UK's economic policy in line with other major countries.

Plastic waste is also in the Treasury's sights, with Mr Hammond announcing a consultation on implementing a plastic tax.

"I am pleased to report. on a United Kingdom economy that has grown in every year since 2010", Hammond told lawmakers.

He accused Labour of "relentlessly talking Britain down" with "doom and gloom about the state of the nation".

If the OBR's forecasts prove accurate, another five-year run of low growth is already under way.

Borrowing for 2017-18 is expected to come in at £45.2bn, down from the £49.9bn forecast in November and by 2021-22 is expected to have more than halved to £21.4bn.

Well, Mr Hammond reported a higher growth forecast for 2018, and a fall in inflation, borrowing and debt.

Debt will peak at 85.6 per cent this year, and then fall to 77.9 per cent in 2022 and 2023.

The Chancellor declared there is "light at the end of the tunnel" after years of belt-tightening, as he rejected his "Eeyore" nickname and announced himself "positively Tigger-like" about UK's fortunes.

Britain's Chancellor of the Exchequer Philip Hammond leaves 11 Downing Street to deliver his half-yearly update on the public finances, in London, March 13, 2018.

At this year's Budget he will "set an overall path for public spending for 2020 and beyond" with a detailed spending review in 2019.

As the Chancellor delivered his statement, MPs from the opposite benches were quick to offer a different take on the economy via Twitter. "Our economy is created to fail people - and it needs an overhaul".

The Chancellor added that since 2016 he had set out a plan to "unleash our creators and our innovators, our inventors and our discoverers". "We choose to champion those who create the jobs and the wealth on which our prosperity and our public services both depend, not to demonise them".

"The OBR's minor cuts to its estimates for inflation for 2018/19 and 2019/20, to 1.8% and 1.9%, may help a little on this front, too, also giving the Bank of England breathing space when it comes to its latest interest rate decision next Thursday".

The government will also invest £1.7 billion to create another 26,000 affordable homes in London, and in addition housing minister Dominic Raab is said to be working with 44 local councils that have bid for a £4.1 billion housing infrastructure fund. Some 215,000 new homes are also scheduled to be built in the West Midlands by 2031.

Hammond said the Treasury will launch a call for evidence to examine options on reducing single-use plastics, including taxes.

"The growth predicted in the hard period up to Brexit was encouraging, as was the £80m for small businesses via the Apprenticeship Levy to help them overcome the complexity of the system".

Hammond also confirmed that 60,000 first-time buyers have now benefitted from the abolition of stamp duty for homes under £300,000.

He said: "I remind the House that the party opposite voted against it".

The markets, though, warmed to Hammond's speech and sterling rose slightly against the dollar, no doubt fuelled by comments hailing the United Kingdom as an "outward looking free trading nation" whose "best days are ahead of us".

"As the global growth backdrop holds firm, and with progress on a Brexit transition deal potentially announced next week, we believe downside risks to growth in the short-term are limited".

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