Spring Statement 2019: Philip Hammond has billions to spend but Brexit is restricting planning, says IFS

Philip Hammond delivers his Spring statement in the Commons
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Britain's deficit crisis has been brought under control giving Philip Hammond the freedom to inject extra billions into the economy, experts said today.

However, the Institute for Fiscal Studies warned Brexit chaos engulfing the Government was restricting the Chancellor’s ability to plan ahead.

Ahead of the Chancellor’s Spring Statement, IFS director Paul Johnson said: “He’s going to be making it with absolutely no idea what is going to be happening regarding Brexit in a couple of weeks, and therefore frankly absolutely no idea what is going to be happening to the economy.” He said Office for Budget Responsibility economic forecasts would be based on Brexit in a “fairly orderly fashion,” but there was no guarantee that this would happen.

Mr Johnson also emphasised a “quite remarkable” fall in the national deficit in the last decade.

It could be around £25 billion this year after a bumper £21 billion was collected in income tax and corporation tax in January. “The coalition government came in in 2010 with a record peacetime deficit,” Mr Johnson said.

“Today it’s below where it was in 2007 before the crash, it’s at its lowest since 2001, it’s much lower than it has been on average over the last 60 or 70 years.”

Mr Hammond was expected to tell MPs that “there is no limit to our ambition… and no boundaries to what we can achieve” once the Commons decides on “a (Brexit) deal we can, collectively support”.

The Chancellor was set to say the country now has “real, sustainable choices about its economic future”, and was due to add: “If we leave the EU with a deal... and an orderly transition to a future economic partnership... we will see a deal dividend from an economic boost from recovery in business confidence and investment.”.

He was also due to float how there could be “real choices to decide... how we would share (the deal dividend) between increased spending on public services, capital investment in Britain’s future prosperity and keeping taxes low... all while continuing to get the debt down”.

The Chancellor believes he would also get more freedom to spend if he did not have to hold back so many extra billions to cope with a “no-deal”.

However, shadow Chancellor John McDonnell said: “I’m warning the Chancellor: don’t dare use the Spring Statement to threaten more years of austerity in order to intimidate MPs into supporting the Government’s bad Brexit deal.”

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