Britain’s public finances showed a slightly bigger-than-expected deficit in August, leaving finance minister Philip Hammond little room for manoeuvre as he prepares his first post-Brexit vote budget plans. Julian Satterthwaite reports.
Deficit makes UK Brexit budget boost tough
Philip Hammond may not have much room to give the UK a Brexit budget boost.
An unexpected spike in public borrowing leaving him with less cash to spare.
Britain’s budget shortfall hitting just over 10.5 billion pounds in August.
That’s half a billion higher than forecast by economists, but any link to the shock Brexit vote is hard to prove.
SOUNDBITE (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK, JAN RANDOLPH, SAYING:
“I think the problem for the UK now we have entered this Brexit interim phase is lower growth, we are certainly forecasting that although we seem to have avoided an outright recession. Low growth does mean lower tax collection and it does open up the deficit, all things remaining equal.”
Hammond has already dropped a target of turning the deficit into a surplus by 2020.
He had been expected to open the public spending taps, at least a little.
The chancellor saying he’s open to funding new infrastructure projects, though he’s toned down earlier talk of a major fiscal re-set.
Longer term, much hangs on how Brexit turns out.
Britain’s budget deficit was just over four percent of economic output last year.
That’s well down from the peak of ten percent, but still among the highest for developed nations.
However Brexit turns out, balancing the books looks like a distant prospect.