Published: Tue, November 29, 2016
Economy | By Melissa Porter

United Kingdom growth seen to slow sharply in 2017

Its comments came as Chancellor Philip Hammond laid bare the economic gloom facing the nation, with forecasts revealing sweeping downgrades to United Kingdom growth and a sharp rise in Government borrowing.

Speaking about the expected growth slowdown next year, Mr Hammond said: " That's slower, of course, than we would wish, but still equivalent to the IMF's forecast for Germany, and higher than the forecast for growth in many of our European neighbours, including France and Italy.

"That largely reflects weaker tax receipts through a smaller and slightly older population, marginally offset by slightly lower welfare spending", the OBR said in a report published alongside finance minister Philip Hammond's first budget update.

The chancellor said: "No other major economy makes hundreds of tax changes twice a year and neither should we".

"But the Prime Minister and I remain firmly committed to seeing the public finances return to balance as soon as practicable", he said.

The United Kingdom will borrow $151 billion more over five years than was forecast before this summer's vote for Brexit.

The Chancellor said that GDP growth in 2017, the year the United Kingdom is expected to begin the process of leaving the European Union, is now expected to be just 1.4%.

The UK Independent Party's only MP Douglas Carswell said the "unsustainable levels of public debt" were down to Mr Hammond's predecessor George Osborne who failed to "match his words with deeds and get a grip on public spending", rather than a reflection on Brexit.

Mr Chote conceded that the OBR's "crack" at the hit to the public finances following the decision to leave the European Union was uncertain, admitting that there was a 50pc chance that United Kingdom growth could be stronger than the OBR's central forecast.

Law highlighted the continued commitment to cut Corporation Tax to 17 percent by 2020 as a particular benefit, and commended the £23 billion planned investment in innovation and infrastructure over the next five years.

Mr Hammond said the target to clear the deficit would be cleared "as early as possible" after the original target of 2020. Big handouts would require a reversal of past cuts to income and corporate tax.

The tax-free personal allowance will increase to £12,500 by the end of the Parliament, with a higher rate threshold of £50,000.

These included an increase in national living wage in April from 7.20 pounds an hour to 7.50 pounds an hour and a freeze on fuel duty.

An extra £50m a year will be used to fund grammar school expansion.

The OBR predicts it will now borrow £21.9bn that year, compared with the £10bn surplus previously forecast.

Hammond, the Chancellor of the Exchequer, also said the United Kingdom government would need to borrow billion of pounds more over the next five years to invest in infrastructure in order to offset the negative results of the Brexit vote.

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