The UK economy is developing better than expected, according to the British Finance Minister Philip Hammond. The growth of the UK economy is expected to reach 1.4% this year, which is 0.1% higher than the current forecast. The expectations for 2019 and 2020 do not change and remain at 1.3%.
The growth forecasts were downgraded for the two years thereafter, according to the Independent Budgetary Accountability Office (CSO). The data shows that increase in productivity in recent years is temporary.
Philip Hammond told parliament that he aims to achieve better results than the the forecasts. He underlined his commitment to reduce UK public debt levels, but focused on the positive ones, highlighting the return of household spending growth in early 2019.
The British economy has slowed down sharply after the Brexit vote in June 2016. Earlier on Tuesday, the Organization for Economic Cooperation and Development (OECD) announced that the UK will grow weaker than the other leading G20 economies this year.
Despite a slowdown in growth, the government plans to take 20.3 billion GBP (28.4 billion USD) of less loans between 2017/18 and 2022/23 over the November forecast.
The budget deficit for the current fiscal year was reduced to 45.2 billion GBP from the projected 49.9 billion GBP in November, revealed Philip Hammond. Collapse is less than most economists expect. Britain cut its annual deficit from 10% of GDP in 2010, when it came out of the global financial crisis, to just over 2% now. Some Conservative Party members urged him to take advantage of progress in deficit reduction to channel more funds to the health system, the army, and other services.
Philip Hammond said he could allow a slight increase in public spending later this year, but stressed in his speech that Britain’s public debt remains too high. He said he is aiming to achieve the goal of reducing the debt-to-GDP ratio each year, which should fall below 78% of GDP to the fiscal 2022/23 compared to the expected 85.6% now.
Hammond is confident that he will be able to meet the other target of cutting the budget deficit to 2% of GDP by 2020/21.