Hammond facing big choices
Chancellor ‘unlikely’ to end austerity despite deficit boost
Paul Johnson: Chancellor faces some big choices (pic: Terry Murden)
One of Britain’s top tax experts cast doubt on Chancellor Philip Hammond bringing a swift end to austerity when he delivers his Spring Statement next week.
To do so would require “significant additional resources” despite the public sector posting its second biggest monthly surplus ever in January, said Paul Johnson, director of the economics think tank, the Institute for Fiscal Studies.
Reflecting on Mr Hammond’s cautious comments in the Autumn budget on the end of austerity, Mr Johnson told an Edinburgh pensions conference: “Borrowing seems to be under control, so he could decide to unwind austerity. Or does high debt and ongoing uncertainty mean he sticks to his plan?”
The Prime Minister Theresa May told her party’s conference in September that austerity was over, but Mr Hammond clawed back expectations when he allocated extra money to the NHS and made it clear that spending would continue to be reined in for other departments.
Mr Johnson, speaking at the Pensions and Lifetime Savings Association investment conference in Edinburgh, said: “The Chancellor has some very big choices to make.”
He said the deficit was where it was in the early 2000s – a “remarkable achievement” but added that Brexit threw up a number of uncertainties.
“There are still cuts coming and if he really wants to move away from austerity he needs to find significant additional resources.”