“A Britain fit for the future”
The Chancellor, Philip Hammond, delivered his 2018 Spring Statement to the House of Commons today, where he gave an update on the economic forecast, summarising the state of debt and borrowing in the UK.
The chancellor’s proudest moments in the speech were highlighting the slight increase in growth forecast for the next few years, and a lower forecasted level of borrowing. Growth is now forecast at 1.5% for this year, up from 1.4%. In the November 2017 budget, the chancellor put forward predictions for GDP growth to be at 1.5% in 2017, 1.4% in 2018, and 1.3% in 2019/20, before rising to 1.5% and 1.6% in 2022.
The OBR now expects a 0.1% increase in GDP growth in 2018, followed by the same GDP growth rate for 2019 and 20; and then a 0.1% lower GDP growth in 2021 and 2022 – a slight improvement from the previous forecast, but still largely the lowest level of GDP growth the UK has seen in the last decade.
Alongside the chancellor’s forecast, other economic organisations were less optimistic. The Organisation for Economic Co-operation and Development has marginally raised its forecast for UK growth this year, to 1.3% – before slowing to 1.1% in 2019. This puts the UK at the lowest level of GDP growth of any developed country.
The UK’s debt levels were addressed next, with Mr Hammond proudly stating that the OBR expects debt to peak this year, and gradually fall as a share of GDP. The chancellor said he expected debt to fall to 79.1% of GDP by 2023, after peaking at 86.5% in 2017/2018. The chancellor also said that borrowing would also fall, from 2.4% this year, to 1.9% next year.
The chancellor’s speech was littered with less than subtle criticisms of the Labour Party, targeted mainly towards John McDonnell, the shadow chancellor, comparing his manifesto pledges of more money, against the Conservative’s forecasted reduced borrowing.
One of the main criticisms directed at the Chancellor, the prime minister and the Conservative Party is the lack of spending on public services. In his speech on Tuesday, the chancellor announced that after a detailed spending review in 2019, if the public finances continue to reflect the improvements today’s OBR report hints at, he may be able to increase public spending.
“His complacency today is astounding”
The shadow chancellor, John McDonnell, was severely critical of the chancellor’s statement, saying his claims of a ‘light at the end of the tunnel’ showed his naivety. The shadow chancellor pointed out that last year, growth in the UK economy was the slowest since 2012, with wages lower in real terms than in 2010.
In contrast to the sunny economic forecast by Philip Hammond, and the ‘housing initiative’ which topped of his speech, the shadow chancellor highlighted the state of the homelessness crisis, with over 5,000 rough sleepers in Britain, over double the amount recorded in 2010. Earlier in the month, Jeremy Corbyn pointed out that the ‘homelessness task force’ announced by the chancellor last year, were yet to hold a meeting until the 7th March this year.
Russia’s midnight deadline
Theresa May has given Moscow a ‘midnight deadline’ to explain its involvement in the poisoning attack on former spy Sergei Skripal in Salisbury earlier this month.
Speaking to the House of Commons on Monday, the Prime Minister said that “military-grade nerve agent of a type developed by Russia” had been used to target Sergei Skripal, who was attacked along with his daughter, Yulia. Theresa May said Britain would not accept such a “brazen attempt to murder innocent civilians on our soil”.
On Wednesday, the prime minister claims she will consider the response, if there is any, given by the Russian government. Speaking on Monday, Mrs May said: “Should there be no credible response, we will conclude that this action amounts to an unlawful use of force by the Russian state against the United Kingdom.”