Raymond Doherty 13 Mar 2019 02:35pm

Spring Statement: Growth cut amid no deal warning

Chancellor Philip Hammond has revealed a sharp cut to UK economic growth forecasts over the next few years and warned of no deal consequences

In his Spring Statement, Hammond also warned that a no-deal Brexit would deliver a significant short-to-medium term hit to the UK economy, increase unemployment, and increase prices in shops.

He implored Parliament to remove the threat of an imminent no-deal Brexit threat by voting against it tonight, as it is hurting the economy and the UK’s standing internationally. He also said it is “just wrong” to think there is a simple way of coping without a deal.

Parliament must “put aside our differences and seek a compromise in the national interest”.

“Tomorrow, we will have the opportunity to start to map out a way forward towards building a consensus across this House for a deal we can collectively support, to exit the EU in an orderly way,” he said.

If a Brexit withdrawal agreement is struck Hammond will launch a full three-year Spending Review before the summer recess, to be concluded alongside an Autumn Budget.

This year, according to the Office For Budget Responsibility (OBR), UK economic growth will fall to 1.2% – down from its previous prediction of 1.6%. Over the next few years the OBR predict, 1.4% (2020), 1.6% (2021), 1.6% (2022), 1.6% (2023).

The borrowing figures were a lot more positive for the chancellor. “Looking forward, borrowing will fall from £29.3bn in 2019-20, then £21.2bn, £17.6bn, £14.4bn and finally £13.5bn in 2023-24 – its lowest level in 22 years," he said.

Hammond pledged to spend a £26.6bn “Brexit dividend” to boost the economy, but again, only if there was a smooth exit.

There were no major tax and spending announcements as expected, however, he revealed a number of consultations, reviews and policies.

On the digital economy, the Digital Services Tax remains and the Furman review – an independent review of competition in the digital economy – was announced. The chancellor has also requested the Competition and Markets Authority immediately undertake a study of the digital advertising market.

Hammond revealed that to help tackle the problem of late payments for small businesses, audit committees will now be required to report late payment practice.

He announced that the government will publish a National Infrastructure Strategy alongside the Autumn Budget and a £37bn National Productivity Fund.