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LONDON (Reuters) – British Finance Minister Philip Hammond is using Monday's annual budget speech to urge his divided Conservative party to back the government in favor of an agreement on Brexit or to jeopardize a measure. of much awaited austerity.
On October 28, 2018, Philip Hammond, Chancellor of the Exchequer of Great Britain, participated in the Marr show on BBC Television, in central Britain. Jeff Overs / BBC / Handout via REUTERS
Hammond, who regularly enmeshes many conservative lawmakers by calling for close ties with the EU after Brexit, will offer insights into rising spending after nearly a decade of cuts in many public services.
But he will also say that a reduction in the pressure on spending will depend on the conclusion of an agreement between London and Brussels to facilitate the exit of Britain from the EU in five months.
"If we do not find an agreement … we would need a different approach to the future of the British economy," Hammond told Sky News television on Sunday.
"We should consider a different strategy and, frankly, we would need a new budget that sets out a different strategy for the future."
Prime Minister Theresa May has so far failed to rally the conservatives to her Brexit strategy, raising fears that Britain will leave the EU in March without a deal transition.
Hammond could immediately mitigate an economic shock by spending a portion of the reserves built within the limits of its fiscal rules.
But a Brexit without a deal would probably reduce Britain's annual growth rate to only 0.3% next year and in 2020 and increase borrowing, the National Institute for Economic and Social Research said last week. , a think tank.
The UK economy has slowed since the 2016 Brexit referendum, but not as much as many economists feared, allowing Hammond to announce Monday a further improvement in the budget deficit.
Nevertheless, Britain's debt level remains high, limiting Hammond's ability to ease spending.
He said Sunday that the biggest increase in spending on his budget had already been announced when May announced four months ago that more money would go to the health service.
It should announce other measures, including an increase in road expenses, a tax break for small retailers hammered by online competition and an increase in spending on broadband.
Hammond hinted on Sunday that it would lessen the impact of the changes to the welfare system and said he wanted a timetable of progress to ensure that giant technology companies pay more for # 39; taxes.
For the moment, however, it should avoid talking of a wider push for an increase in taxes, which tax experts need for Britain to need to cope with the costs. from an aging population.
Last year, Hammond was forced to turn back on his plan to raise taxes for self-employed workers after an outcry in the Conservative Party, which has since lost its majority in parliament.
Written by William Schomberg; Edited by Susan Fenton
