United Kingdom growth seen to slow sharply in 2017

United Kingdom growth seen to slow sharply in 2017

It downgraded growth for next year from the 2.2% predicted in March to just 1.4% and for 2018 from 2.1% to 1.7%.

Britain's decision to exit from the European Union, or Brexit, following a referendum in June, means the United Kingdom will grow only 1.4 percent in 2017 and 1.7 percent in 2018, compared with forecasts in March for growth of 2.2 percent and 2.1 percent, respectively, Hammond said Wednesday.

He said there would be a budget deficit of about $27 billion in 2019/20.

"The question is, why would growth slow so much in 2017, then inexplicably pick up in subsequent years?"

Hammond said the Brexit vote underlined the urgent need to tackle the United Kingdom economy's long-term weaknesses as the Office for Budget Responsibility cut growth forecasts for next year.

This means the UK's Brexit black hole is at least £122bn, more than the £100bn previously forecast by the City, according to The Guardian.

Mr Hammond said he was striving to ensure the economy was "match fit" for the "new chapter" ahead, unveiling a series of plans aimed at boosting productivity and helping low-income workers.

As economic growth slows, OBR forecast that debt would rise from 84.2% of GDP last year to 87.3% this year, peaking at 90.2% in 2017-18 as the Bank of England's monetary policy interventions approached their full effect.

The extra borrowing was significantly higher than the £100bn expected by the City, as Hammond kicked his predecessor George Osborne's plan to balance the books by 2020 into the long grass saying he would not expect this to happen until some time in the next parliament - at least a decade away.

After that, this is set to fall to 89.7% in 18/19, marking the first fall since 2001/2, and is forecast to continue falling thereafter. Secondly, the government must get net debt falling by the end of this parliament; and lastly, it must keep welfare spending below a limit.

Meanwhile, Hammond also unveiled a new £23bn National Productivity Investment fund focusing on innovation and infrastructure, which will make investments over a five-year period.

And a housing infrastructure fund of £2.3bn will be formed to build infrastructure for 100,000 homes in areas of high demand with a further £1.4bn to build 40,000 additional affordable homes.

Other key points, such as the announcement of investment in the transport and roads infrastructure, an increase of the National Living Wage from £7.20 - £7.50 an hour from April 2017 and the recognition of the importance of a strong digital infrastructure will also benefit both the plastics - as well as wider - United Kingdom manufacturing industries.

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