Britain’s chancellor was expected to raise public spending as he unveiled Britain’s 2018 budget yesterday, bidding to convince his divided Conservative Party to back his plans to manage growth through the threats of Brexit.
In the last annual budget speech before Britain exits the European Union next year, Philip Hammond was set to signal that the end is in sight for austerity, a spending policy designed to reduce national debt which was implemented after the global financial crash.
Britain’s budget deficit is now at around 2 per cent of GDP in comparison with 10 per cent in 2010 when the Conservatives came to power.
The chancellor has indicated he will give an extra £2 billion (Dh9.4 billion) to mental health services as well as an increase of £29bn for road building as part of a cautious end to almost a decade of spending cuts.
Sterling slipped close to a near two-month low against the dollar yesterday amid ongoing uncertainty about Britain’s likelihood of reaching a trade agreement with the world’s largest trading bloc. The pound was valued at $1.2817 and failed to improve against the euro since last week, trading flat at €1.126.
Despite planning to have a deal agreed by the autumn, Brussels and UK Prime Minister May’s government are still at the negotiating table trying to make progress on major sticking points such as the Irish border.
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Mr Hammond had previously warned rebellious Brexiteers in his party who favour leaving the EU that the spending increase will be dependant on London agreeing a Brexit deal with the EU before March 29, 2019. In the event of a “no-deal” divorce, an emergency budget would replace the current spending plans.
Speaking to the BBC on Sunday, Mr Hammond said if no agreement was reached "frankly, we'd need to have a new budget that sets out a different strategy".
But on yesterday Mrs May said the spending announcements in the budget would go ahead even if Britain leaves without a deal.
“We’ve been clear that people need to know that their hard work has paid off and that the austerity that followed the financial crash is coming to an end. That’s why we are focused on delivering irrespective of Brexit, starting with today’s budget which locks in the progress we have made and sets us on a path for the spending review, where we will set out our long-term approach.
"All of the spending commitments that the Chancellor will set out today are funded irrespective of a deal," the prime minister’s official spokesman said.
