A bleak Brexit budget that slashed growth forecasts but gave young voters a tax break on buying their first property may have placated critics of British Finance Minister Philip Hammond, at least for now.
Hammond was under intense pressure from within his Conservative Party to spend money Britain doesn’t have on courting voters, even though he is boxed in by uncertainty over the impact of Britain’s March 2019 exit from the European Union.
Despite the sombre outlook for economic growth and government borrowing, Hammond announced some spending steps aimed at winning back voters, in particular abolishing a property tax for most first-time home-buyers.
The plans were enough to win over Conservative lawmakers, some of whom who had even been urging Prime Minister Theresa May before the budget to fire Hammond — nicknamed “Spreadsheet Phil” — for his cautious approach to Brexit and the public finances.
“It is clear that, thankfully, we are now all singing off the same spreadsheet,” said Conservative lawmaker Andrew Bridgen. He had previously suggested May would have to sack Hammond if he deviated from the government’s position on Brexit.
The Sun newspaper praised Hammond for putting money in voters’ pockets while the right-wing Daily Mail declared Hammond was “Eeyore no more!”, referring to the glum donkey from A A Milne’s Winnie-the-Pooh books. Last month the pro-Brexit paper had described him as treacherous and dismal.
“I’ve never been gloomy, I’m a pragmatist. I take the world as it is,” Hammond told BBC radio. May told broadcasters he had done a very good job on the budget, when asked if his job was safe.
Other media were sceptical about his chances of silencing his critics. The Financial Times said “’Box Office’ Phil does enough to survive, for now”. The Office for Budget Responsibility (OBR) scythed its projections for economic growth in the coming years in the midst of a dire decade for productivity — the worst since 1812, according to the Resolution Foundation think-tank.
The budget forecasters chopped their economic outlook for the next five years, with growth in 2017 cut to 1.5 per cent from a previous estimate of 2.0 per cent, a contrast with world economic growth of 3.6 per cent in 2017 and 3.7 per cent in 2018, according to the International Monetary Fund.
Weak growth means Britain will make glacial progress in fixing its public finances, leaving Hammond boxed in.
The Institute for Fiscal Studies said at the current pace, based on current rates of debt reduction, Britain would not cut debt as a share of gross domestic product back down to its level before the 2007-08 financial crisis until the 2060s. — Reuters
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