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March 9, 2017

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UK upbeat on economy as Brexit looms

BRITAIN’S Treasury chief was upbeat about the state of the economy as he unveiled his budget yesterday, but said he plans to keep a lid on spending amid uncertainty over the country’s exit from the European Union.

Philip Hammond outlined his plan for the 2017-18 fiscal year laying the foundations for what he called a “stronger, fairer, better Britain” outside the EU. Prime Minister Theresa May and her predecessor have presided over seven years of austerity as they struggled to close a budget deficit that ballooned during the financial crisis.

“The only responsible course of action ... is to continue with our plan undeterred by any short-term fluctuations,” Hammond said. “We will not saddle our children with ever-increasing debts.”

Hammond nonetheless offered a surprise influx of 2 billion pounds (US$2.4 billion) for social care over three years, responding to a crisis in funding care for the country’s aging population.

The caution over spending comes despite an improvement in government finances. While the latest figures from the independent Office for Budget Responsibility show government borrowing during the 2016-17 year will probably be about 16.6 billion pounds less than previously forecast, Hammond noted Britain is still 1.7 trillion pounds in debt.

The Office for Budget Responsibility also upgraded its forecast for economic growth this year, saying the economy will likely expand 2 percent, compared with the previous estimate of 1.4 percent. But it downgraded the outlook for 2018 to 1.6 percent from 1.7 percent and in 2019, to 1.7 percent from 2.1 percent.

Meanwhile, more than a third of small firms expect “business rates,” the property taxes paid by companies, to rise, and 20 percent are preparing for rises of over 40 percent, a survey by the Federation of Small Businesses showed.


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