Philip Hammond had the opportunity to make some important announcements today. What a shame he chose not to take it, writes Henna Shah
Amid further scandal in Westminster, the potential outbreak of World War Three, and a total upending of foreign policy in Washington’s corridors of power, at least one person was cheery today.
Philip Hammond, or ‘Eeyore’ as some colleagues have described him, found himself ‘positively Tigger-like today,’ as data from the Office for Budget Responsibility revising projected growth in Gross Domestic Product for this year up from 1.4 per cent to the dizzying heights of 1.5 per cent.
As reasons to be cheerful go, he does seem to be scraping the barrel a little. What he neglected to mention was that the OBR has not changed its forecasts for 2019 or 2020, and has actually revised down its expectations for GDP growth in 2021 and 2022 from 1.5 and 1.6 per cent to 1.4 and 1.5 per cent. So, while we will be receiving a tasty 0.1 per cent increase in growth this year (accompanied by slightly greater cut to the deficit thanks to higher than expected tax receipts), Hammond’s Tigger impression seems short-sighted at best.
The Resolution Foundation has highlighted how this short-term boost is compared to medium-term stagnation, both for national and household accounts. In fact, they estimate there is 17 years of lost pay growth before real-terms pay reaches its pre-crisis peak.
The OBR also attempted put an estimate on the Brexit divorce bill, coming in at £37.1bn – slapbang in between the Treasury’s estimate of £35bn to £39bn. However, a further note of caution with this one: it was quick to highlight that this was a number based purely on accounting from the phase one deal; with the true cost of Brexit ‘impossible’ to quantify.
And all this against a heavy note of caution for Britain from the Organisation for Economic Co-operation and Development, with our growth forecast to lag behind the United States, France, Germany and even Italy.
As for new initiatives, Hammond seems keen to start lots of reviews, including one on single-use plastics and another on small business rates, and he made a few warm noises about money for T-levels and housing.
Much like the 10,000 millennial railcards released today, the chancellor’s idea of fiscal management seems like a very small drop in a very turbulent ocean.
Henna Shah is editorial assistant at Progress. She tweets at @hennalikespie
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