Philip Hammond readies budget plan in the shadow of Brexit

British chancellor Philip Hammond will present a bullish outlook for British growth in a Brexit Budget on Wednesday aimed at bolstering the country’s economic defences ahead of Theresa May’s imminent triggering of EU divorce proceedings.

Hammond is due to announce at 1:30pm the first full budget statement since the referendum decision to take Britain out of the bloc, which had been expected to deliver a quick, sharp economic blow to Britain.

Instead, consumers carried on spending heavily and made Britain the second-fastest growing economy in the Group of Seven rich nations in 2016.
May will have to fight off resistance to starting the contentious two-year exit process, after the House of Lords on Tuesday voted by 366 to 268 to insist she give parliament, and not Downing Street, a “meaningful vote” on a Brexit deal with Brussels, a move that would in effect give MPs a veto.
Although May expects to overturn the House of Lords amendment next Monday when the legislation returns to the Commons, the move has fuelled anxiety among Eurosceptics that MPs will seek a parliamentary device to derail Brexit at the eleventh hour.

May expects to start the Article 50 exit process within days. Some government officials expect her to start the Brexit process on 16 March, the day after Dutch elections, where Geert Wilders, the anti-EU populist, is holding on to first place in pre-vote opinion polls.
Hammond’s Budget will be buoyed by stronger-than-expected growth and tax receipts. But the chancellor will acknowledge the risks by building up his £27 billion Brexit “insurance fund” pencilled in for 2019. Officials said he “would not shirk difficult decisions on tax and spending” to shore up the public finances.

The chancellor has earmarked £1 billion for new schools and technical education, including £500 million for a technical education overhaul and £320 million for more free schools, many of which may be selective following on from May’s pledge to roll out grammar school places.

There will be an emergency injection of cash of more than £1.5 billion to shore up social care provision with councils across the country complaining that the system for looking after the elderly and the disabled is at breaking point.

The public finances will also be much stronger this year than thought in the Autumn Statement, with a cut in borrowing of around £12 billion, leaving the deficit at around 3 per cent of national income — down from 10% at the peak of the financial crisis.

The good economic news will be soured by longer-term forecasts that are not as rosy. The fiscal watchdog will not change its sober view of the medium-term potential for living standards to rise.

Hammond has also warned his colleagues not to regard any windfall on the public finances as permanent. “We shouldn’t mistake any short-term change in the borrowing figures due to one-off factors for a long-term structural change,” he said at the weekend.