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The UK’s growth for this year has been hiked in the latest set of official forecasts delivered by the government as the chancellor celebrated a fall in the government’s borrowing bill over the course of the parliament.

Delivering his first spring Budget at the House of Commons today, chancellor Philip Hammond said the UK had “confounded the commentators with robust growth” as he announced growth would rise to 2 per cent this year from a forecast of 1.4 per cent made in November.

Next year, growth is expected to slow to 1.6 per cent from an estimate of 1.7 per cent made in the Autumn Statement, according to independent watchdog the Office for Budgetary Responsibility. The overall size of the economy in 2021 would still be smaller, sticking to the forecast predicted in the Autumn Statement despite faster short-run growth.

Mr Hammond also said the UK’s borrowing bill would fall from 3.8 per cent last year to 2.6 per cent in 2017 as a result of the growth bounce falling to 1.9 per cent at the end of the parliament.

Meanwhile, the government’s overall debt to GDP pile would peak at just 88.8 per cent next year, 1.4 per cent lower than forecast in November, with the longer run forecasts broadly unchanged from previous forecasts. Inflation would hit 2.4 per cent this year but wages packets were predicted to keep growing.

The chancellor said his fiscal plans would achieve a reduction in the deficit while preserving fiscal stability.

“We will not saddle our children with ever increasing debt”, he said.

Copyright The Financial Times Limited 2017. All rights reserved.
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