SPRING FORWARD
Spring Statement 2018: Philip Hammond unveils good news on the economy – and hints he could use windfall to go on spending spree
PHILIP HAMMOND today unveiled good news for the economy, promising "light at the end of the tunnel" - and hinted he will turn on the spending taps this year.
Delivering the Spring Statement, the Chancellor blasted Labour "doom and gloom" as he announced the official budget watchdog has upgraded its estimates for growth.
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Mr Hammond even expressed optimism about Brexit as he vowed to "deliver a Brexit that supports British jobs, businesses and prosperity" by cutting a good deal with Europe.
The Office for Budget Responsibility forecasts a falling deficit as well as the predicted rise in growth, prompting calls for an end to austerity after eight years.
Mr Hammond has refused to increase spending for now, warning that Britain still faces a sky-high debt burden - but today suggested he will ease austerity at the next Budget this autumn.
He has faced pressure from Tory backbenchers and opposition parties to open his wallet and give more cash to the NHS, defence and welfare.
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In the Spring Statement, Philip Hammond announced:
- The UK economy is growing faster than expected, with growth of 1.5 per cent forecast for 2018
- National debt is about to start falling as a share of the economy as the Government no longer borrows cash for day-to-day spending
- The economic gains will allow him to increase spending later this year while average wages will finally begin to rise above inflation by the autumn
- Ministers will consult on a new litter tax and provide tax relief for small firms
- Tech giants could face tax changes which will see them finally paying their fare share
- The 2p coin and £50 note may be axed after a review of how people use cash and spend money online
- A tax break for white van men if they buy green vehicles which don't damage the environment
Opening his speech, the Chancellor said: "The UK economy has grown every year since 2010."
He hailed the strongest manufacturing growth for 50 years and record low unemployment, blasting Labour for spreading "doom and gloom" on the economy.
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In a nod to his own gloomy reputation, he said: "If there are any Eeyores in this chamber, they are on the benches over there. I on the other hand am at my most Tigger-like today."
He revealed the OBR has upgraded its growth figures to 1.7 per cent in 2017 and 1.5 per cent this year - both higher than previously forecast in last November's Budget.
Calling on the nation to do even better than predicted, the Chancellor said: "That’s the OBR’s forecast - but forecasts are made to be broken. As a nation we did it in 2017, and we should do it again."
And Mr Hammond confirmed Britain no longer needs to borrow cash to fund day-to-day spending - instead, all money borrowed now goes on capital spending which has a long-term payoff.
The Government is expected to borrow £45.2billion this year - nearly £5billion less than previously forecast, allowing ministers to spend more without breaking the bank.
But the OBR also warned that bringing the deficit down to zero will require ongoing cuts or tax rises over the next few years.
Eeyore Phil changes his tune as he springs to the aid of his boss
PHILIP HAMMOND has long been dubbed “Eeyore” for his glum demeanour and gloomy predictions - especially about Brexit, Hugo Gye writes.
But today he performed a near-miraculous turnaround, hinting he will turn on the spending taps later this year in a daring move which seems designed to prop up his embattled boss Theresa May.
After eight years of austerity, millions of voters are now tired of relentless cuts - helping Jeremy Corbyn spring to the top of the polls.
As recently as two days ago, Mr Hammond suggested that austerity will not be reversed for at least two years.
His cautious approach to spending is partly a result of his downbeat position on Brexit, saying he wants to pay down the national debt in case quitting the EU leads to economic chaos.
During today’s Spring Statement, he performed a U-turn, revealing for the first time that he will boost overall spending in the autumn and putting Labour on the back foot.
The Chancellor has not always got on well with Mrs May - she threatened to sack him last year - but his promise to ease austerity might just keep her in a job by blunting Mr Corbyn’s most powerful line of attack.
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Hinting at a boost in public spending, the Chancellor said: "If, in the autumn, the public finances continue to reflect the improvements that today's report hints at then I would have capacity to enable further increases in public spending and investment in the years ahead, while continuing to drive value for money to ensure that not a single penny of precious taxpayers' money is wasted."
In another boost for hard-pressed Brits, he announced that inflation is forecast to fall this year, meaning that by the autumn real incomes will again be rising after two years where pay hikes lagged behind soaring prices in the shops.
Praising the UK's innovative tech sector, Mr Hammond namechecked popular apps TransferWise and CityMapper - as well as Matt Hancock, the social network bizarrely set up by the Culture Secretary.
He also pledged to help local councils boost housebuilding in a bid to make it easier for young people to buy their own home, as well as providing cash for regional transport infrastructure.
Responding in the Commons, John McDonnell called on the Chancellor to start spending again as soon as possible, saying: "We face – in every public service – a crisis on a scale we’ve never seen before.
"Hasn’t he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors. They are telling him they can’t wait for the next Budget. They’re telling him to act now."
The shadow chancellor also brought up the death of a homeless man yards from Parliament, saying the fate of the man - who later turned out to be a convicted paedophile - was an emblem of austerity.
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Paul Johnson, boss of the respected Institute of Fiscal Studies, warned Mr Hammond that growth was still slower than expected before the 2016 EU referendum.
He said: “Not that much to be Tiggerish about here.
“Growth forecasts dreadful compared with what we thought in March 2016, dreadful by historical standards and dreadful compared with most of the rest of the world.”
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