British budget to help households facing Brexit stormclouds
Britain on Wednesday delivers a first budget since the Brexit referendum, with government hopes of trimming austerity hampered by financial uncertainty surrounding the country's EU exit strategy.
The Conservative government’s finance minister Philip Hammond delivers his Autumn Statement before parliament around 1230 GMT — exactly five months after the Brexit vote.
“Hammond will use his first Autumn Statement to unveil a series of measures designed to improve the living standards of ordinary working class people and their families,” the Treasury said in a statement.
Among his key pledges, Chancellor of the Exchequer Hammond will announce a £1.4-billion ($1.7-billion, 1.6-billion euros) investment to help build 40,000 “affordable” homes.
He will meanwhile raise the National Living Wage to £7.50 an hour in April from £7.20.
“We need to be match fit for the opportunities and challenges” arising from Brexit, Hammond declared on Sunday, while warning that Britain still faced an “eye-watering” deficit following the 2008 global financial crisis that has triggered almost a decade of deep UK government spending cuts.
Official data Tuesday revealed smaller-than-expected government borrowing at £4.8 billion in October from a year earlier on robust tax revenues.
Nevertheless, Hammond was Wednesday expected to hike his borrowing forecasts on weaker-than-anticipated economic growth ahead of Britain’s divorce from the EU.
Research group Capital Economics believes the Autumn Statement will outline “a modest” stimulus package of about £7 billion in the 12 months to the end of March 2018.
“This will help offset some of the negative effects of Brexit-related uncertainty on the economy,” it said.
“However, the big picture is that austerity is not over — just that fiscal policy should be less of a drag on the economy than previously planned.”
The British economy has remained resilient since the referendum but some experts believe that Britain’s planned departure from the EU could still spark economic chaos.
Prime Minister Theresa May has vowed to trigger Britain’s exit from the European Union by the end of March, after disaffected British voters sent shockwaves across the world in the June 23 referendum by choosing to leave the bloc.
Some economists argue that Donald Trump’s shock election as US president could similarly persuade May’s administration to do more to help workers who have felt shunned by government policies.
“June’s Brexit vote and Donald Trump’s win in the US presidential election has highlighted the need for governments to tackle income inequality,” said IHS Markit economist Howard Archer.
Over the weekend, May announced fresh investment in research and development, revealing that Hammond would hike its spending by £2 billion annually until 2020.
Investments will be rolled out through a new fund that will prioritise technologies including robotics, industrial biotechnology and medical technology.
The government is also set to announce new infrastructure spending, such as on schemes to tackle Britain’s congested roads.