The Chancellor will have been acutely aware, as he rose to address the Commons, that many headlines tomorrow would be dominated by the economic outlook and in particular the fall in growth forecasts.
He sought to extenuate the positives, pointing out that employment levels were at a record high, the deficit was falling as a share of GDP and that the economy had shown resilience in the wake of the summer’s referendum.
But he also acknowledged that the Brexit vote meant it was more imperative than ever to tackle any frailties in the nation’s finances, adding that the Government was committed to tackling these challenges head-on.
Growth is expected to be 2.4 per cent lower over the forecast period as a result of the uncertainty arising from the referendum result.
The Office for Budget Responsibility (OBR) has calculated that growth will be 2.1 per cent this year, falling to 1.4 per cent in 2017.
“That is lower than we would like, but still higher than many of our European neighbours,” said Mr Hammond.
Borrowing, meanwhile, will be 3.5 per cent this year, dropping to 0.7 per cent by 2021-22.
While acknowledging that the Government no longer expected to balance the books by the end of the decade, the Chancellor announced three new fiscal rules: to achieve a surplus in the next Parliament and reduce borrowing to two per cent by the end of this one, to get net debt falling by 2020 and to ensure welfare spending is kept within a cap set by the Government.
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