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Britain hikes Brexit pot, slashes growth forecasts
November 23, 2017
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London: Britain on Wednesday substantially hiked its funds for Brexit preparations, as it slashed growth forecasts over a five-year period in a key annual budget update.

The government will put aside another £3.0 billion ($4.0 billion, 3.4 billion euros) ahead of its exit from the European Union, finance minister Philip Hammond told parliament.

“I stand ready to allocate further sums if and when needed,” the chancellor of the Exchequer said, after Britain had already put aside £700 million prior to Wednesday’s additional amount.

“The negotiations on our future relationship with the EU are in a critical phase,” he told lawmakers, ahead of Britain’s scheduled departure in March 2019.

Hammond said the government would make progress on achieving agreement on implementing Brexit “a top priority in the weeks ahead”.

At the same time, he warned that Britain’s economy will grow much slower than expected over the next five years, as it faces Brexit uncertainty and weak productivity.

British gross domestic product will grow 1.5 per cent this year, by 1.4 per cent in 2018, 1.3 per cent in both 2019 and 2020, and 1.5 per cent in 2021, Hammond revealed in a raft of GDP downgrades.

Britain’s Conservative government unveiled its annual budget against a backdrop of difficult Brexit negotiations with Brussels, already sluggish UK economic growth and high UK inflation that is stretching household incomes.

“Regrettably our productivity performance continues to disappoint,” Hammond said.

Heading into Wednesday’s announcements, Hammond was under pressure to deliver an eye-catching budget after Brexit spats with cabinet colleagues − and following Prime Minister Theresa May’s botched general election earlier this year.

Hammond meanwhile lowered the UK government’s deficit forecast.

Government borrowing was expected to hit £49 billion in the current fiscal year which runs through to April. That was £8.4 billion lower than given previously.

“We are on track to meet our fiscal rules,” Hammond noted, despite official data showing on the eve of the budget that Britain’s public finances worsened unexpectedly last month.

Public sector net borrowing, the government’s preferred measure of the deficit, rose to £8.0 billion in October on soaring debt-interest payments.

The budget takes “a balanced approach.... maintaining fiscal responsibility, as we at last see our debt peaking (while) continuing to invest in the skills and infrastructure that will support the jobs of the future,” said Hammond.

Agence France-Presse

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