In his pared-down statement on 13th March, “Spreadsheet Phil” will have some better numbers on growth and the public financesby Paul Wallace / March 8, 2018 / Leave a comment
Along with yellow daffodils, one of the first sights of spring is a chancellor of the exchequer brandishing the red box outside No 11 Downing Street before heading to the House of Commons to deliver his budget. But not this year: Philip Hammond did that last November for the fiscal year starting this April. And now instead of the customary budget he will make a Spring Statement, on Tuesday 13th March.
“Spreadsheet Phil” has reset the fiscal calendar as part of his resolve to break with the tradition of his predecessors over the past two decades in holding in effect two budgets a year, a recipe for short-term fiddling and political grandstanding. Hammond has already made clear that the Spring Statement will be drained of political colour, with no new tax-and-spend measures. Instead the chancellor will confine himself to the monochrome minimum that he is obliged to do, which is to present a new set of economic and fiscal forecasts.
The requirement for the government to publish economic forecasts at least twice a year dates back to the Industry Act of 1975 (a high-water mark as it happens for Bennite interventionism in the economy). Since 2010 the independent Office for Budget Responsibility (OBR) rather than the Treasury has carried out the economic and fiscal forecasting together with an assessment of how the government is doing in meeting its budgetary objectives. Despite Hammond’s desire to downplay the Spring Statement, the OBR’s new forecasts will cast light on the economy and public finances as the painful reality of Brexit looms ever larger.
That painful reality will be spelt out in new disclosures of annual payments to the European Union to settle the “Brexit bill,” put at between £35bn and £39bn. However, this will not change the budgetary forecasts since the OBR will continue to assume that departure from the bloc will be “fiscally neutral.”
The OBR is likely to paint somewhat brighter economic prospects than it did at the budget in November. Then it forecast GDP growth of 1.5 per cent in 2017 slipping to 1.4 per cent in 2018 and 1.3 per cent in 2019, the year that Britain is due to leave the EU. In fact the economy expanded by 1.7 per cent last year according to the Office for…