Hammond hails 'light at the end of the tunnel' for economy

Spring Statement 2018 5 things to look out for

Spring Statement 2018 5 things to look out for

The shadow chancellor labelled Mr Hammond's "complacency" as "astounding" during the Spring Statement, before sounding warnings over the state of the United Kingdom economy.

The medium-term forecasts were less upbeat, however, with the OBR predicting economic growth of 1.3% next year (unchanged from last November's forecast), 1.3% in 2020 (also unchanged), 1.4% in 2021 (down from 1.5%) and 1.5% in 2022 (down from 1.6%).

In his first spring statement to the House of Commons, the Chancellor revealed that the Office for Budget Responsibility now expects GDP growth in 2018 to be 1.5%, rising from the estimate of 1.4% at November's budget.

The OBR also revised down debt and borrowing costs.

Lower than expected borrowing and higher than predicted GDP growth a year ago will bring a note of optimism, but Philip Hammond has already suggested it is too early to take his foot off the austerity brake.

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Inflation hit 3.1% in November 2017, but the OBR predicted it had reached its peak.

Hammond also looked comfortably on course to meet another target to cut the budget deficit, when adjusted for the swings of the economic cycle, to 2 percent of GDP by the 2020/21 financial year.

Mr Hammond hinted at the possibility that austerity will be eased in this autumn's Budget.

Mr Hammond said he was inviting cities across England to bid for a share of £840 million to deliver on "local transport priorities".

Cash payments made up 40% of payments in 2016, and are predicted to fall to 21% by 2026, while the growth of digital payments has been fast-paced, according to the consultation paper.

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He said: "Our economy will remain and open and outward-looking, confident to compete with the best in the world".

He first addressed the topic in the Autumn Budget, amid concerns the current system does not tax companies where they make their money. Growth in 2017 was 1.7%, compared with the 1.5% forecast by the OBR previous year.

"Today's brief address will likely see the first full analysis of Brexit's impact on United Kingdom public finances, good news in terms of lower public borrowing and economic growth higher (but not necessarily an end to austerity), as well as announcement of a range of consultations on issues such as tax for small businesses, inheritance tax for individuals and a levy on "single use" plastics", said Accendo Markets analysts Mike van Dulken & Henry Croft.

In addition, the Housing Growth Partnership fund will double to £220m, providing increased support for small housebuilders. Mr Hammond reported that 60,000 buyers have benefited from the change to date.

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