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Published: Thu, December 08, 2016
Economy | By Melissa Porter

Two budgets in 2017 after last statement in autumn

Two budgets in 2017 after last statement in autumn

Indeed, Hammond said the government would need to borrow billion of pounds more over the next five years, with net public sector debt forecast to rise to a peak of 90.2 percent in 2017/18, up from a projection of 81.3 percent in March.

The budget black hole covers the period until early 2021, according to official forecasts.

Britain has cut its official forecasts for economic growth for the next two years, finance minister Philip Hammond said on Wednesday, as he delivered the country's first budget statement since voters made a decision to leave the European Union.

As Hammond presented the forecasts by the government's independent watchdog, the Office for Budget Responsibility (OBR), he said borrowing would hit £68.2 billion this year and £59 billion next year compared with the March forecast of £55.5 billion and £38.8 billion. He said the United Kingdom lags behind the USA and Germany by 30%, France by 20% and Italy by 8%.

ING economist James Knightley said the chancellor had been handed "little room for manoeuvre".

To soften the hit to living standards for poorer households, the chancellor announced before Hammond's statement that the government would raise the minimum wage, partially reverse planned cuts in benefits for low-earners and curb fees on renting property. The Spring Statement will begin in 2018 and will be used to announce responses to the Office for Budget Responsibility's latest forecasts, review wider economic and fiscal challenges and launch consultations.

Hammond said he would make the economy resilient for leaving the European Union.

Autumn Statement 2016 Chancellor Hammond
GETTY BUDGET Hammond is aiming to reward people who work hard

The opposition Labour Party said the government was "unprepared and ill-equipped" for Brexit.

But shadow chancellor John McDonnell said the Autumn Statement placed on record the "abject failure of the last six years".

Mr Hammond said the slowdown was due to "lower investment and weaker consumer demand, driven, respectively, by greater uncertainty and by higher inflation resulting from sterling depreciation".

Some experts have warned that a heavy blow could fall on the United Kingdom economy once divorce proceedings with the rest of Europe begin.

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

As Hammond addressed the nation, a small group of pro-Brexit demonstrators were gathered outside parliament demanding Article 50 be triggered immediately.

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