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Hammond talks up United Kingdom economy despite Brexit 'cloud'

16 March 2019

In documents released alongside Chancellor Philip Hammond's Spring Statement, the Office for Budget Responsibility (OBR) said growth in the United Kingdom and global economies had slowed since October's Budget, leading to a downgrade in its short-term forecasts.

"We estimate (treating loans partly as grants) could increase the structural budget deficit by around 12 billion pounds or 0.5 percent of gross domestic product in 2020-21", the OBR said.

DESPITE THE current constraints, Chancellor Philip Hammond's low-key Spring Statement did try to dispel the view that the business of government has completely ground to a halt because of Brexit.

However, Britain's independent budget forecasters said nearly half of Hammond's fiscal headroom might be lost, depending on how official statisticians treat student loans in the public accounts.

But this depends on a Brexit deal being completed in the next few weeks and the "uncertainty that is hanging over our economy lifted".

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Philip Hammond referred to the British economy as "remarkably robust" during today's Spring Statement.

Hammond told lawmakers he could relax his grip on the public finances if they spared Britain the shock of leaving the world's biggest trading bloc without an agreement.

He said Parliament's rejection of Prime Minister (PM) Theresa May's Brexit deal had created a "cloud of uncertainty" and crashing out would cause "significant disruption".

His statement comes after Parliament overwhelmingly rejected May's Brexit deal for a second time on Tuesday night.

Lawmakers were expected to vote later on Wednesday against a leaving the European Union without a transition deal, then vote on Thursday on seeking a delay to Britain's departure, now scheduled for March 29. "That is not what the British people voted for in June 2016".

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"Higher unemployment; lower wages; higher prices in the shops".

Britain will have a £26.6-billion (RM143.92-billion) war chest to battle the potential damage of its exit from the European Union, a government oversight body said.

MPs were expected to vote later today against a no-deal Brexit and then vote on Thursday in favour of the government seeking a delay to Britain's departure, now scheduled for March 29.

IFS director Paul Johnson noted that Brexit and its unknown outcome had seen Hammond hold back on significant spending announcements based on better-than-expected tax revenue.

Earlier yesterday, the government unveiled plans for temporary tariffs if the United Kingdom crashes out without a deal.

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Hammond talks up United Kingdom economy despite Brexit 'cloud'