Budget '˜to secure a bright future for Britain'
Chancellor Philip Hammond has said he will use the Budget to 'invest to secure a bright future for Britain', in a strong signal that he is ready to start bringing down the curtain on the age of austerity.
In his keynote statement on Wednesday, Mr Hammond is expected to respond to intense pressure for government spending to boost industrial productivity and ease the housing crisis, as he promises to build “a Britain fit for the future”.
But his room for manoeuvre has been limited by surprise figures showing that state borrowing jumped to £8 billion last month, adding to pressure from the Office for Budget Responsibility’s expected downgrade of productivity projections.
The director of the Institute for Fiscal Studies, Paul Johnson, said Mr Hammond was caught “between a rock and a hard place” and may be forced to abandon his target of balancing the nation’s books by the middle of the next decade.
Meanwhile, Labour was demanding large-scale investment in infrastructure to boost “sluggish” manufacturing industry, along with new cash for the public services, a major house-building programme and a pause in the government’s flagship Universal Credit welfare reform.
As he finalised preparations for his second Budget statement, Mr Hammond sought to damp down expectation of a full-blown turn away from the austerity agenda which has dominated economic policy for seven years, insisting his package would be “balanced”.
But addressing MPs in the House of Commons, he will leave no doubt that increased investment is at the heart of his programme.
“In this Budget, we express our resolve to look forwards, to embrace change, to meet our challenges head on, and to seize the opportunities for Britain,” he is expected to say.
“Because for the first time in decades, Britain is genuinely at the forefront of a technological revolution, not just in our universities and research institutes, but this time in the commercial development labs of our great companies and on the factory floors and business parks across the land.
“So we must invest to secure a bright future for Britain, and at this Budget that is what we choose to do.”
In an apparent bid to shake off the “Eeyore” tag attached to him by Brexit-backing Tories frustrated by his cautious approach to EU withdrawal, Mr Hammond will paint an optimistic vision of a future “global Britain”.
This could mean “a prosperous and inclusive economy where everybody has the opportunity to shine wherever in the UK they live, whatever their background ... An outward looking, free-trading nation, a force for good in the world, a country fit for the future”, he will say.
Mr Johnson told the Economia website the best route for the chancellor would probably be to “do very little and leave himself some room for manoeuvre later on”, but he was coming under intense political pressure not to do so.
“On the one hand, he is under pressure to cut spending to hit his fiscal targets, on the other he is under pressure to increase spending,” said the IFS director.
“It’s a genuinely difficult Budget. If he is serious about his fiscal rules, he won’t be able to give in to the pressure for spending. If he gives in to the demands for spending, that’s pretty much a statement that his fiscal rules are out of the window.”
Labour leader Jeremy Corbyn, who visited the Aston Martin car factory near Warwick in the run-up to the Budget, said it was time for the government to support business by investing in infrastructure.
“It is a crucial time for businesses across our country,” said Mr Corbyn. “Companies and workforces need clarity and certainty from the government, but the Tories’ chaotic handling of the Brexit negotiations is putting jobs and living standards at risk.
“Our manufacturing sector has had notable successes, but it has been held back for too long: investment has stalled and productivity lags behind many of our European neighbours. Despite the fall in the value of the pound, UK manufacturing growth remains sluggish.
“The chancellor must use the Budget to invest in infrastructure to give our economy the boost it so badly needs, invest in our public services and the people who provide them, halt the disastrous rollout of Universal Credit and begin a major new house-building programme.”
The Budget is expected to include proposals to increase house-building to 300,000 a year and to help young people buy their own homes, with intense speculation that stamp duty could be cut.
Motorists are fearful of a hike in diesel duty to support air quality, and measures are expected to assist “Millennials” with the cost of rail travel and end overcharging on student loans.