The decision to leave the european Union will “change the course of british history“, stressed Wednesday, Philip Hammond in front of the Parliament in his statement of budgetary fall, his first since the vote in June of the British to the output of the european Union.
If the growth has remained resilient in 2016 – with a 2.1% expected, the Uk should expect a sharp slowdown next year. The public Office of budget responsibility (OBR) has lowered its forecast to 1.4% from 2.2% expected in march.
Mr. Hammond has cited as the main causes of this phenomenon. “a decline in investment and weaker demand“, the consequences of the uncertainty that now reigns and the acceleration of inflation due to depreciation of the pound.
Debt – burdened –
In total, due to the vote for the Brexit, the Uk will be losing 2.4 percentage points of growth over the period 2016-2021, said the OBR, illuminating all the forecasts of tax revenues.
The public deficit is expected to be much higher than expected by 2021, with an increase in the borrowings of 122 billion pounds (143 billion euros) over five years. Half of it is a direct consequence of Brexit and the remainder is bound to the will of the government to give a little air to the activity and the households after years of austerity.
The minister of Finance has referred to a hypothetical return to a balanced budget, beyond 2020.
The labour opposition has denounced a fundamental failure of the conservatives despite a severe austerity cure imposed since their return to power in 2010. “today’s announcements mark the dismal failure of the past six years and offer no hope for the future,” thundered John McDonnell, the minister of Finance of the government “phantom” labour.
Under budgetary constraints, the conservative government has not been able to announce stimulus measures spectacular, so as not to damage the public accounts that were somewhat recovered.
The new executive came to power after the referendum would have dreamed of being able to offer beautiful gifts to low-income families, many of whom have voted in favour of the Brexit, but finally had to confine itself to a few gestures in favour of the households and the business community.
- boost to households –
The announcement of the most iconic is a rise in the minimum wage, which will rise to 7.5 pounds per hour (the equivalent of 8.8 euros) from April 2017, an increase of 4%. A boost welcome when the rise in prices threatens the purchasing power.
The minister of Finance wants to eliminate the cost of real estate agencies which are paid by the tenants at the time of signing a contract. It intends to also support the real estate sector, promising investment of 1.4 billion pounds to support the construction of 40,000 new housing units.
He also announced the creation of an investment fund of 23 billion pounds to improve productivity in the years to come by supporting research and development, road networks or even fiber optic.
The main employers ‘ organisation, the CBI, expressed the hope that these measures will materialize quickly : “it is only when the tarmacs, roads (have been built) and that cables have been laid they doperont investment, jobs and growth“, has underlined its executive director Carolyn Fairbairn. It has also called on the authorities to be attentive to the perverse effects of inflation and uncertainty for businesses.
On the tax front, the Finance minister has simply reiterated that the corporate income tax, currently 20%, would grow to 17% by 2020, which will be the lowest of all G20 countries.
In terms of good news, the Uk has slightly raised its growth forecast for 2016 by 0.1 point.