Experts says Britain’s debt pile set to grow amid EU exit and as Hammond goes on infrastructure spending spree
- Credit: PA
Britain's new Chancellor will borrow billions of pounds more money to build roads and instal lightening speed broadband as independent forecasters claim Britain's economy is poised to take a £60bn Brexit hit.
Philip Hammond was forced to abandon plans for a budget surplus by the end of the decade after the Office for Budget Responsibility predicted slower growth and higher-than-expected borrowing in its independent forecasts.
The Conservative told MPs times had moved on and his task was now 'to prepare our economy to be resilient as we exit the EU and match-fit for the transition that will follow'.
The OBR said the Government could be expected to borrow £122bon more over the five years to 2020/21 than it predicted at the time of the Budget in March - three months before the Brexit vote. And it said that some £58.7 billion of this was directly attributable to the referendum result and the cost of leaving the EU.
Of this, some £16bn would be caused by lower immigration, said the OBR - though it added the figure, largely caused by the loss of taxes which migrants would otherwise pay to the Treasury, would be even higher if the Government achieved its ambition of reducing net migration to the tens of thousands. However, its calculations did not include any gains from ceasing contributions to the EU's Budget, currently running at around £13 billion a year.
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Overall, the OBR predicted that potential economic growth over the five-year period would be 2.4 percentage points lower than if the UK had voted to Remain in the EU. It downgraded growth for next year from the 2.2% predicted in March to just 1.4% and for 2018 from 2.1% to 1.7%.
Mr Hammond said the slowdown was due to 'lower investment and weaker consumer demand, driven, respectively, by greater uncertainty and by higher inflation resulting from sterling depreciation'.
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But shadow chancellor John McDonnell said the Autumn Statement placed on record the 'abject failure of the last six years'.
The UK Independent Party's only MP Douglas Carswell said the 'unsustainable levels of public debt' were down to Mr Hammond's predecessor George Osborne who failed to 'match his words with deeds and get a grip on public spending', rather than a reflection on Brexit.