Britain's Chancellor of the Exchequer Philip Hammond leaves 11 Downing Street in London, Britain, March 7, 2018. REUTERS/Henry Nicholls
March 8, 2018
LONDON (Reuters) – British finance minister Philip Hammond is not counting on improved public finances to announce a big increase in spending in a budget statement next week, despite calls for more money for health and other services, an aide to Hammond said.
Britain’s official budget forecasters are expected to paint a better short-term outlook for the budget deficit on Tuesday in a half-yearly update. Some media have speculated that Hammond might loosen his grip on spending after heavy cuts in some services since 2010.
“The Treasury isn’t assuming any increase or revision of figures,” said Kwasi Kwarteng, a lawmaker who is Hammond’s parliamentary private secretary.
“I don’t think that has been factored in by the Treasury and certainly not by the chancellor. There is no sense that we are complacently spending billions,” Kwarteng said at a panel discussion held by the Resolution Foundation think-tank on Thursday.
“So that means that the deficit reduction plan is very much on course.”
Britain has cut its budget deficit from 10 percent of gross domestic product in 2010, shortly after the global financial crisis, to about 2 percent now. Hammond has said he wants to eliminate it altogether by the mid-2020s.
Kwarteng said the reports of a 10 billion-pound budget boost for Hammond should be taken with “a pinch of salt.”
However, the figures are likely to reflect stronger economic data – even as Britain lags behind faster growth in many other rich nations – and lower borrowing than the Office for Budget Responsibility’s projected in November in its last budget plan.
The Resolution Foundation said on Thursday the deficit for the 2017/18 financial year, which ends this month, was likely to be 7 billion to 11 billion pounds lower than the almost 50 billion-pound shortfall the OBR predicted in November.
Hammond has said he wants to focus on bringing down Britain’s high public-sector debt.
He plans next week’s Spring Statement to be low key because he wants the November budget announcement to be the main annual event for British fiscal policy.
Kwarteng said Hammond’s statement to parliament would last around 20 minutes, compared with the usual hour.
(Writing by William Schomberg, editing by Andy Bruce, Larry King)