IFS: Hammond's Budget Shows Britain Not Serious About Cutting Budget Deficit by Mid-2020s
Yesterday, UK Chancellor of Exchequer Philip Hammond provided the UK budget. Hammond raised the total funding for Brexit preparation to GBP 4B. He also noted that budget deficit has fallen to less than 1.5% this year. And it’s projected to fall further to 0.8% by 2023-24. Hammond also raised growth forecasts for 2019 and 2020. For 2021 and 2022, growth projections are kept unchanged.
According to the Institute for Fiscal Studies (IFS), UK budget plans show Britain is not serious about its goal of wiping out its budget deficit by the mid-2020s. The government forecasts Britain's budget deficit this year will be its lowest since 2001/02 at 1.2% of GDP, before rising to 1.4% in 2019/20. Public sector net debt is seen falling slightly to 85.0% of GDP, after more than doubling after the financial crisis.
The IFS also said it was debatable whether the budget heralded the end of austerity, but it added that the plans marked a change of fiscal direction for Britain.
According to new GDP projections, UK economy will raise by 1.6% in 2019, up from 1.3% in the spring statement. In 2020, GDP is projected at 1.4%, up from 1.3% in the spring statement. UK GDP is forecast to be 1.4% in 2021, unchanged from 1.4% in the spring statement. In 2022, GDP is projected to be 1.5%, unchanged from 1.5% in the spring statement.