November 23, 2016•Update: November 23, 2016
By Michael Sercan Daventry
LONDON
Britain abandoned plans to seek a budget surplus by the end of the decade as the country’s finance minister cut growth predictions as a result of Brexit.
Chancellor Philip Hammond said U.K. growth forecasts for 2017 would fall to 1.4 percent, a reduction from 2.2 percent, as a result of the country’s decision over the summer to leave the European Union.
He said the slower economic growth, coupled with higher inflation and lower tax receipts, meant the country could no longer balance the budget by 2020 -- a key target of former Prime Minister David Cameron’s government.
Hammond told the House of Commons on Wednesday: “In view of the uncertainty facing the economy, and in the face of slower growth forecasts, we no longer seek to deliver a surplus in 2019-20.
“But the prime minister and I remain firmly committed to seeing the public finances return to balance as soon as practicable, while leaving enough flexibility to support the economy in the near term.”
Hammond said the country’s funding shortfall would need to be covered by increased borrowing.
The U.K. economy will face its exit from the European Union by committing £23 billion ($28.5 billion) to infrastructure projects, including new housing and a focus on growth and development outside the economic powerhouse surrounding London, he announced.
He also raised the minimum wage and halted reductions to welfare payments for some low earners.
Hammond’s statement was criticized by the opposition Labour Party, whose finance spokesman John McDonnell said the plans “offer no hope for the future”.
