U.K.’s Hammond Has Few Budget Options as Outlook Dims, IFS Says

by Dramelin 4:30 AM 0 comments

Chancellor Philip Hammond will have no room in his next budget to cut taxes or ease limits on public-sector pay as the nation’s fiscal watchdog downgrades its assessment of the economy, according to the Institute for Fiscal Studies.
Hammond will need to abandon his commitment to reach a surplus by the mid-2020s if he agrees to fund a pay rise for state employees or otherwise cushion the economy against any fallout from leaving the European Union, the IFS said in an analysis released on Monday.
The Office for Budget Responsibility probably will revise lower its U.
productivity growth estimates, and annual government borrowing could reach almost 70 billion pounds ($92 billion) by 2021-22 if the worst-case scenario plays out, it said.
The figure may be about 11 billion pounds if the OBR makes a less drastic assessment, the IFS said.
The watchdog has warned of a cut in its forecast for productivity and that years of disappointing figures suggest low growth is the new normal, not just an overhang from the financial crisis.
is the worst-performing economy among Group of Seven nations this year.
’s Fiscal Watchdog Plans to Cut Productivity Outlook Again “We have a successful and resilient economy, with a near record number of people in work,” a Treasury spokeswoman said in a statement responding to the IFS report.
The government has made “good progress” on the deficit but the national debt burden is still too high, she said.
Years of austerity have helped to narrow the budget gap from 10 percent of GDP in the aftermath of the financial crisis to 2.
3 percent last year.
The September shortfall was 5.
9 billion pounds, down from 6.
6 billion pounds a year earlier and the smallest for the month in a decade, the Office for National Statistics said on Oct.