Economy

United Kingdom cuts growth forecast for 2019 - Hammond

United Kingdom cuts growth forecast for 2019 - Hammond

Hammond said the Spending Review will "reflect the public's priorities between areas like social care, local government, schools, police, defence, and the environment".

"That is not what the British people voted for in June 2016" to leave the European Union, the chancellor added.

Theresa May's chancellor has broken ranks to suggest she should back a softer Brexit which can win Labour backing after her deal suffered a second crushing defeat in the Commons.

Gross Domestic Product (GDP) is now expected to grow by 1.2% in 2019, compared to a previous prediction of 1.6%.

The Office for Budget Responsibility predicted economic growth of 1.2% this year - a downgrade from the 1.6% forecast at the Budget in October 2018.

Public sector net borrowing in 2019/20 is forecast to fall to £29.3bn, down from the £31.8bn forecast at the budget, with the cumulative forecast between 2018/19 and 2023/23 was revised down by almost £30bn to £119bn.

Last night's vote leaves a cloud of uncertainty hanging over our economy.

Other highlights from the statement included an extra £100m to tackle knife crime, a £3bn Affordable Homes Guarantee scheme and a reduction in borrowing.

More news: Roger Federer and Rafael Nadal to clash in Indian Wells semi-final

The thinktank also warned that it could not determine whether austerity was ending and public services moving "decisively upwards after almost a decade of unprecedented cuts" until the conclusion of the chancellor's spending review, which will be unveiled alongside the autumn budget later this year.

He said Britain's public debt was set to fall sustainably "for the first time in a generation".

"I hoped we would do that last night, but I am confident that we, as a House, will do it over the coming weeks".

"While in theory this should give the Chancellor greater wriggle room, he was at pains to point out that the purse strings won't be loosened until there is greater clarity around the UK's future relationship with the EU".

The OBR said a recent run of disappointing economic data in both the United Kingdom and other major economies had also weighed on expectations. "It must be avoided".

He reiterated the Government's commitment to Northern Powerhouse Rail and said that Transport for the North's spending plans would be appraised before the Budget this Autumn.

He added: "There's plenty that needs fixing and there are ways of raising more revenue, but they need to be carefully thought out and implemented if they are to be both effective and fair".