LONDON (Reuters) – Britain's Finance Minister Philip Hammond will use his annual budget on Monday to urge his divided conservative…
LONDON (Reuters) – Britain’s Finance Minister Philip Hammond will use his annual budget on Monday to urge his divided conservative party to come behind the government’s driving force for a Brexit agreement or risk a long-awaited relief of austerity.
UK Prime Minister Philip Hammond appears on Marr Show on BBC Television in central London, UK on October 28, 201
8. Jeff Overs / BBC / Handout via REUTERS
Hammond, who routinely regrets many conservative legislators by calling for close links with The European Union after Brexit will give a glimpse of higher spending after almost a decade of cuts to many public services.
But he will also say that a relief in the cost pressures will lead London to reach an agreement with Brussels to smooth Britain’s exit from the EU in five months.
“If we do not get an agreement … we would need to take another approach to the future of the UK economy,” Hammond told Sky News TV on Sunday.
“We would have to look at another strategy and frankly we would have to have a new budget setting a different strategy for the future.”
Prime Minister Theresa May has failed to collect the conservatives behind her Brexit strategy so far, giving rise to concerns that Britain could leave the EU in March without transitional agreements.
Hammond could mitigate immediate shock to the economy by spending some of the reserves he built in the context of his fiscal rules.
But a brilliant Brexit would probably lower Britain’s annual growth rate to only 0.3 percent next year and 2020 and raise loans, said the National Institute of Economic and Social Research, a tanker last week.
Britain’s economy has slowed since the 2016 referendum, but not as much as many economists feared, enabling Hammond to announce Monday another improvement in the budget deficit.
Britain’s debt levels are still high, limiting how much Hammond can relax their expenses.
He said on Sunday that the biggest increase in spending in his budget had already been announced when May said four months ago that more money would go to health care.
He will announce other actions, including more expenses on roads, a tax rebate for small retailers hampered by online competition and more broadband spending.
Hammond hinted on Sunday that he would alleviate the effects of changes in the welfare system and said he wanted a timetable for progress in getting giant technology companies to pay more taxes.
At the moment, however, he is expected to refrain from talking about a broader push for higher taxes as tax experts say Britain needs to meet the costs of an aging population.
Last year Hammond was forced into a U-turn on his plan to raise more tax from self-employed after a revolt in the Conservative Party, which has since lost its majority in parliament.
Writing by William Schomberg; Editing Susan Fenton
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