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London - Chancellor of the Exchequer Philip Hammond said the UK economy will grow more slowly than previously forecast next year as he made his first major intervention since Britain voted to leave the European Union.
Outlining his Autumn Statement to Parliament on Wednesday, Hammond said the Office for Budget Responsibility now sees 2017 growth of 1.4% instead of the 2.2% forecast in March.
With Brexit expected to add tens of billions of pounds to government borrowing in the coming years, Hammond is seeking to help low and middle-income families and chart a course for fiscal discipline.
The deteriorating economic outlook leaves him little room for major fiscal giveaways. He has pledged to focus on the needs of “ordinary working class families” as he seeks to address the concerns of those who feel left behind by globalisation.
The vote to leave the EU “makes more urgent than ever the need to tackle our economy’s long-term weaknesses, like the productivity gap, the housing challenge and the damaging imbalance in economic growth and prosperity across our country,” Hammond told lawmakers in the House of Commons.
“Our task now is to prepare our economy to be resilient as we exit the EU and match-fit for the transition that will follow.”
The economy has proved unexpectedly resilient to the June referendum result, and the OBR revised its 2016 growth forecast to 2.1% from 2%. But cracks are already appearing.
Employment growth is slowing and household incomes are starting to come under pressure as the falling pound spurs inflation.
Measures announced by the Treasury ahead of the speech include £1.4bn to help build 40 000 new homes and a relaxation of the rules governing affordable housing funds. The minimum wage will also be increased to £7.50 an hour from the current £7.20 and recipients of Universal Credit will be allowed to keep more of the money they earn.
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