From Brexit to PFI: the key Budget takeaways
By Portfolio Adviser, 29 Oct 18
Chancellor Philip Hammond pledges ‘end to austerity’ with Autumn Budget
The upgraded GDP estimate is a 0.3% increase on the prediction made in the Spring Statement.
The OBR then predicts growth of 1.4% in 2020/21, 1.5% in 2022 and 1.6% in 2023.
Chancellor Philip Hammond said the era of austerity is “finally coming to an end”.
He said borrowing as a share of GDP is likely to rise to 1.4% next year and expected to total £31.8bn, £26.7bn. £23.8bn, £20.8bn and £19.8bn in next five years.
Hermes Investment Managers senior economist Silvia Dall’Angelo said: “Overall, the government’s fiscal stance will remain slightly restrictive over the next few years, with the only exception of fiscal year 2019-20. Indeed, the structural fiscal deficit is expected to temporarily widen to 1.6% GDP (from 1.3% in 2018-19) to accommodate possible Brexit inconveniences, resuming a gentle downward trend in following years. In other words, fiscal adjustment has been back loaded, which has been a typical feature of recent budgets.
“Crucially, the Chancellor pointed to the constraints of a potentially disruptive Brexit next year. While he still thinks negative Brexit developments bear a low probability, he earmarked an additional £2bn for Brexit preparations and said that he would retain the £15bn, around 0.7% GDP, rainy day fund in order to deploy it in a no-deal scenario, if needed.”