Hammond pledges economy ‘that works for everyone’ in debut Autumn Statement

Phillip Hammond

THE Chancellor promised an economy that “works for everyone” in his first Autumn Statement which also revealed reduced growth and higher debt forecasts.

Philip Hammond said he wanted his economic policy to “prepare our economy for the exit from the European Union and be matchfit for the transition that will follow.”

“We have made our choices, we have set our course,” he said. “We are a great nation – bold in our vision, confident in our strengths and determined in our ambition to build a country that works for everyone.”

In a measured speech, that was shorter and less bombastic in style than his predecessor George Osborne, he identified his key themes of addressing the productivity gap, economic imbalance and housing needs.

Mr Hammond unveiled a £23bn National Productivity Investment Fund and a £2.3bn Housing Infrastructure Fund. He also committed £1.8bn from the Local Growth Fund to the English regions and cities electing a mayor next May will have new borrowing powers.

But he also had to reset the economic foundations to distance himself from Mr Osborne’s and the pre-referendum expectations.

The economic forecasts from the Office for Budget Responsibility now predict growth will be 2.1% this year before falling to 1.4% next year – “equivalent to Germany and higher than France and Italy”, the Chancellor noted. It is then forecast to rise to return to 2.1% in 2019 and 2020.

Debt will continue to rise, peaking at 90.2% of GDP in 2017/18, with the Government now aiming to “return to balance as soon as possible” and not before the end of this Parliament as had been Mr Osborne’s target.

He set out investments in low emission vehicles, 5G networks, an increase in the National Living Wage to £7.50. Mr Hammond also announced measures to raise £2bn by closing loopholes around VAT flat rate and employee share schemes.

“My priority as Chancellor is to ensure that Britain remains the number one choice for business,” added Mr Hammond.

“I know how much business values certainty and stability. We will stick to the business tax road map we set out in March. Corporation tax will fall to 17%, we will deliver the commitments we have made to the oil and gas sector, and we will implement the business rates reduction package worth £6.7bn.”

After the Budget next Spring, Mr Hammond will shift the Budget to the autumn to provide more time ahead of the new tax year in April. A Spring Statement will be used to respond to the twice-yearly OBR report but Mr Hammond promised “no major fiscal changes”.

Hammond also unveiled three new fiscal rules – borrowing should be below 2% by the end of this parliament, public sector net debt as a share of GDP must be falling by the end of this parliament, and welfare spending must be within a cap set by the government.