UK chancellor sees (dim) light at end of tunnel

Quickview: There was some cautiously positive news in the chancellor's Spring Statement, but he did not mention that the UK is currently the weakest economy in the G7.

13 March 2018

Keith Wade

Keith Wade

Chief Economist & Strategist

For what was meant to be a simple economic statement, the UK chancellor Philip Hammond turned much of the first spring budget into a political opportunity to have a dig at the Labour party, with barbs about red books and oncoming trains.

Certainly, he did have an opportunity to unveil stronger growth for this year alongside a forecast of UK inflation falling back to target by the end of the year. Government borrowing has returned to surplus, excluding investment, and debt is set to peak. All good news.

However, much of this was anticipated and it is still fairly cautious, with only a modest upward revision to growth of 0.1% to 1.5% this year.

We should not be surprised: it’s too early in the political cycle for anything more bullish and the chancellor himself said that forecasts are there to be beaten.

No mention, though, of the UK being the weakest economy in the G7 at a time when the rest of the world is booming.

We welcome the initiatives on housing and training, areas key to getting productivity back on track and boosting long run growth. 

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