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| U.K. Spending Plan, First Since ‘Brexit’ Vote, Is Expected to Shelve Austerity | U.K. Spending Plan, First Since ‘Brexit’ Vote, Is Expected to Shelve Austerity |
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| LONDON — After years of tough spending curbs, Britain’s government was expected on Wednesday to bury the rhetoric of austerity, and to try to placate struggling working-class families who feel they have paid the price for the economic downturn that followed the financial crisis. | LONDON — After years of tough spending curbs, Britain’s government was expected on Wednesday to bury the rhetoric of austerity, and to try to placate struggling working-class families who feel they have paid the price for the economic downturn that followed the financial crisis. |
| Help for workers whose low incomes are topped up by welfare payments, a raise in the minimum wage, and modest new infrastructure spending were expected from the first Autumn Statement from Philip Hammond, who became chancellor of the Exchequer, or finance minister, in July. | Help for workers whose low incomes are topped up by welfare payments, a raise in the minimum wage, and modest new infrastructure spending were expected from the first Autumn Statement from Philip Hammond, who became chancellor of the Exchequer, or finance minister, in July. |
| Changes are likely to be centered on a section of society identified by Prime Minister Theresa May as those “just about managing,” also referred to as JAMs, who are thought to have voted in large numbers for British withdrawal from the European Union, or Brexit, in the June 23 referendum. | Changes are likely to be centered on a section of society identified by Prime Minister Theresa May as those “just about managing,” also referred to as JAMs, who are thought to have voted in large numbers for British withdrawal from the European Union, or Brexit, in the June 23 referendum. |
| Plans to finance construction of 40,000 new homes, and to provide more help with child care, are expected. | Plans to finance construction of 40,000 new homes, and to provide more help with child care, are expected. |
| But there is a catch. For this group, as for others, the specter of Britain’s withdrawal from the European Union hovers over the economy. The uncertainties of the situation complicate life for Mr. Hammond and threaten to hit living standards just as they were beginning to improve for some. | But there is a catch. For this group, as for others, the specter of Britain’s withdrawal from the European Union hovers over the economy. The uncertainties of the situation complicate life for Mr. Hammond and threaten to hit living standards just as they were beginning to improve for some. |
| Despite better economic figures so far than many had feared, growth projections are being lowered, and borrowing estimates and inflation forecasts raised. | Despite better economic figures so far than many had feared, growth projections are being lowered, and borrowing estimates and inflation forecasts raised. |
| A pledge by the previous chancellor, George Osborne, to balance the budget by 2020 has been junked. The statement on Wednesday is likely to outline what will replace that target. | A pledge by the previous chancellor, George Osborne, to balance the budget by 2020 has been junked. The statement on Wednesday is likely to outline what will replace that target. |
| One of the cabinet’s steadiest, and most sober, performers, Mr. Hammond is nicknamed Spreadsheet Phil because of his reputation for approaching politics more like an accountant than a visionary. | One of the cabinet’s steadiest, and most sober, performers, Mr. Hammond is nicknamed Spreadsheet Phil because of his reputation for approaching politics more like an accountant than a visionary. |
| He was moved from his post as foreign secretary to become chancellor shortly after the June referendum. He — like Mrs. May — had argued against Britain’s withdrawal. | He was moved from his post as foreign secretary to become chancellor shortly after the June referendum. He — like Mrs. May — had argued against Britain’s withdrawal. |
| That has made him a target for ideological opponents on the right of the governing Conservative Party, who want to speed British withdrawal, fearing that their goal of a swift, clean break with the European Union will be betrayed. | That has made him a target for ideological opponents on the right of the governing Conservative Party, who want to speed British withdrawal, fearing that their goal of a swift, clean break with the European Union will be betrayed. |
| After Mr. Hammond warned in television interviews on Sunday of a rocky outlook and of an economy with an “eye-wateringly large debt” that faces a “sharp challenge,” supporters of the withdrawal accused him of relentless negativity. | After Mr. Hammond warned in television interviews on Sunday of a rocky outlook and of an economy with an “eye-wateringly large debt” that faces a “sharp challenge,” supporters of the withdrawal accused him of relentless negativity. |
| Mr. Hammond’s critics have been buoyed by the fact that those who argued in favor of Britain’s European Union membership issued dire warnings about the economic impact of leaving — predictions that have yet to come true. | Mr. Hammond’s critics have been buoyed by the fact that those who argued in favor of Britain’s European Union membership issued dire warnings about the economic impact of leaving — predictions that have yet to come true. |
| “It is likely that a big fiscal stimulus is reserved for later budgets once we have more information on the impact of the Brexit process,” Sonali Punhani, an analyst at Credit Suisse, wrote in a note for clients. | “It is likely that a big fiscal stimulus is reserved for later budgets once we have more information on the impact of the Brexit process,” Sonali Punhani, an analyst at Credit Suisse, wrote in a note for clients. |
| Despite the positive economic signs, there are some worrying signals. The pound has fallen steeply — a development that is likely to stoke inflation, which looks likely to outstrip wage increases. That would depress living standards. | Despite the positive economic signs, there are some worrying signals. The pound has fallen steeply — a development that is likely to stoke inflation, which looks likely to outstrip wage increases. That would depress living standards. |
| And Britain has yet to start negotiations on its withdrawal, let alone quit the European single market of almost 500 million consumers. | And Britain has yet to start negotiations on its withdrawal, let alone quit the European single market of almost 500 million consumers. |
| Mrs. May plans to invoke withdrawal talks, scheduled to last two years, before the end of March, but uncertainty over the future trading environment seems to be chilling inward investment and reducing tax collection. | Mrs. May plans to invoke withdrawal talks, scheduled to last two years, before the end of March, but uncertainty over the future trading environment seems to be chilling inward investment and reducing tax collection. |
| British businesses have been jittery since the referendum, and there was alarm at Mrs. May’s suggestions in October that she prioritized regaining control of immigration policy. A willingness to accept the free movement of European workers is normally a quid pro quo of winning unfettered access to the bloc’s single market. So Mrs. May’s comments suggested to many that she was aligning herself with those in favor of a clean break. | British businesses have been jittery since the referendum, and there was alarm at Mrs. May’s suggestions in October that she prioritized regaining control of immigration policy. A willingness to accept the free movement of European workers is normally a quid pro quo of winning unfettered access to the bloc’s single market. So Mrs. May’s comments suggested to many that she was aligning herself with those in favor of a clean break. |
| On Monday, Mrs. May sought to reassure businesses fearing a sudden change in rules once Britain leaves the European Union, suggesting that she would seek a deal with the bloc that involves a transition. She also retreated on suggestions that businesses would be forced to place worker representatives on company boards. | On Monday, Mrs. May sought to reassure businesses fearing a sudden change in rules once Britain leaves the European Union, suggesting that she would seek a deal with the bloc that involves a transition. She also retreated on suggestions that businesses would be forced to place worker representatives on company boards. |
| Britain faces some longstanding economic difficulties. According to a research note from three economists at Bank of America Merrill Lynch, those include “woeful productivity performance, the already probably undeliverable austerity that is planned in day-to-day government spending, and the large long-term deterioration in the finances that will result if the government delivers on its plan to reduce migration to the tens of thousands.” | Britain faces some longstanding economic difficulties. According to a research note from three economists at Bank of America Merrill Lynch, those include “woeful productivity performance, the already probably undeliverable austerity that is planned in day-to-day government spending, and the large long-term deterioration in the finances that will result if the government delivers on its plan to reduce migration to the tens of thousands.” |
| The economists wrote that they expected 150 billion pounds, or about $187 billion, of extra government borrowing between now and 2021, mainly driven by “a likely weaker growth forecast due to Brexit,” with gross domestic product 2.5 percent lower over the long term than it would otherwise have been. | |
| Overall, they added, “Brexit means, eventually, higher taxes, lower government spending or permanently higher borrowing.” | Overall, they added, “Brexit means, eventually, higher taxes, lower government spending or permanently higher borrowing.” |
| None of which is likely to make it easier for the government — or for struggling Britons. | None of which is likely to make it easier for the government — or for struggling Britons. |