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Spring statement: Brexit divorce bill could be £37.1bn; growth outlook 'woeful' - live updates Spring statement: Hammond sees better times ahead despite weak growth, as £37bn Brexit bill looms - as it happened
(35 minutes later)
Philip Hammond has promised Britain that “our best days lie ahead of us”, as he delivered an upbeat spring statement paving the way for a boost to public spending in the autumn.
The chancellor announced that GDP is expected to rise faster than previously thought, at 1.5%, up from 1.4% in November’s budget. But growth is still expected to slow to just 1.3% in 2019 and 2020, and be a little slower in 2021 and 2022. City economists said the growth outlook was woeful.
The OBR has estimated that divorcing from the EU will cost Britain more than £37bn. The bill, which includes the Brussels pensions bill, won’t be paid off until the 2060s.
The watchdog also outlined how UK has committed to replacing various EU funding after Brexit, suggesting there won’t be much cash left over (at least in the next few years)
UK will still be paying off the EU divorce bill in 2063. Staggering chart from today's @OBR_UK report pic.twitter.com/kvfKJIFbCV
The OBR also warned that Britain’s long-term outlook was little changed since the last budget. It fears that the recent pick-up in productivity will fade too.
Everyday single-use plastic items such as disposable coffee cups, takeaway boxes and polystyrene packaging could be hit with charges akin to the 5p levy on plastic bags, the government has warned.
The Treasury has floated the prospect of abolishing 1p and 2p coins, and possibly £50 notes too. The idea was raised in a consultation document on the future of cash and digital payments, one of 13 consultation papers published by the Treasury alongside the spring statement. (See 3.21pm.)
Labour has accused Hammond of “astounding” complacency. John McDonnell, the shadow chancellor, made the claim as he responded to the spring statement. Labour pointed out that last year growth was the slowest in the G7, that growth forecasts for the next few years are all lower than in March 2017 and that even the OBR is saying that earnings growth over the next five years will be “subdued”.
That’s all from us today. Here’s our latest news story on the spring statement, and our round-up of the key points:
Thanks for reading, and for the comments. AS and GW
The chancellor did his best to make his speech sparkle, with a few rib-ticklers....
Our economics editor, Larry Elliott, says Philip Hammond has a lot more work to do:Our economics editor, Larry Elliott, says Philip Hammond has a lot more work to do:
Since he became chancellor in the summer of 2016, Hammond has sought to improve the UK’s productivity record through a range of measures including higher infrastructure spending, extra investment in research and development and a greater emphasis on vocational training.Since he became chancellor in the summer of 2016, Hammond has sought to improve the UK’s productivity record through a range of measures including higher infrastructure spending, extra investment in research and development and a greater emphasis on vocational training.
But judging by its forecasts, the OBR thinks it will take many years for things to get better. It believes that the financial crisis and the deep recession that followed dealt a severe and lasting blow to Britain’s long-term growth rate, reducing it from around 2.25% a year to 1.5% a yearBut judging by its forecasts, the OBR thinks it will take many years for things to get better. It believes that the financial crisis and the deep recession that followed dealt a severe and lasting blow to Britain’s long-term growth rate, reducing it from around 2.25% a year to 1.5% a year
The OBR have also adjusted their house price growth forecasts, and now expected weaker growth from 2019 onwards.The OBR have also adjusted their house price growth forecasts, and now expected weaker growth from 2019 onwards.
The main organisation representing NHS trusts in England has welcomed Philip Hammond’s “encouraging” recognition that the health service needs more money, though wants “urgent” action on that front, in contrast to the chancellor’s decision to hold back any details -- and any extra cash -- until the autumn. Saffron Cordery, the deputy chief executive of NHS Providers, said:The main organisation representing NHS trusts in England has welcomed Philip Hammond’s “encouraging” recognition that the health service needs more money, though wants “urgent” action on that front, in contrast to the chancellor’s decision to hold back any details -- and any extra cash -- until the autumn. Saffron Cordery, the deputy chief executive of NHS Providers, said:
It is encouraging that the chancellor has acknowledged funding pressures faced by the NHS which mean the service can’t deliver the levels of patient care set out in the NHS constitution [key waiting time standards such as A&E treatment within four hours and planned hospital care within 18 weeks]. This winter we have seen the impact of under-funding and a lack of staff. We need to see urgent steps put in train to ensure sustainable long term funding for health and social care, because the current situation is unsustainable. It is also vital that any deal that is reached on pay is fully funded, as promised in the budget.It is encouraging that the chancellor has acknowledged funding pressures faced by the NHS which mean the service can’t deliver the levels of patient care set out in the NHS constitution [key waiting time standards such as A&E treatment within four hours and planned hospital care within 18 weeks]. This winter we have seen the impact of under-funding and a lack of staff. We need to see urgent steps put in train to ensure sustainable long term funding for health and social care, because the current situation is unsustainable. It is also vital that any deal that is reached on pay is fully funded, as promised in the budget.
The latest OBR forecasts for earnings are hardly Tiggerish.The latest OBR forecasts for earnings are hardly Tiggerish.
The fiscal watchdog estimates that real earnings growth (pay minus inflation) will be subdued over the next five years, growing by just 0.7% per year.The fiscal watchdog estimates that real earnings growth (pay minus inflation) will be subdued over the next five years, growing by just 0.7% per year.
Even more depressingly, growth in real household disposable income per person is expected to average only 0.4%.Even more depressingly, growth in real household disposable income per person is expected to average only 0.4%.
That means families won’t feel much better off for a long time....That means families won’t feel much better off for a long time....
Despite a very marginal upgrade to the forecast for earnings growth today, real average earnings are now expected to grow by just 3.5% over the next 5 years, meaning their level in 2022-23 would be similar to 2007-08 #SpringStatement @ESRC pic.twitter.com/bPAMO77JRbDespite a very marginal upgrade to the forecast for earnings growth today, real average earnings are now expected to grow by just 3.5% over the next 5 years, meaning their level in 2022-23 would be similar to 2007-08 #SpringStatement @ESRC pic.twitter.com/bPAMO77JRb
The Scottish government is complaining that it is not getting its fair share of the money set aside for Brexit preparations. In a statement Derek Mackay, the Scottish finance minister, said:The Scottish government is complaining that it is not getting its fair share of the money set aside for Brexit preparations. In a statement Derek Mackay, the Scottish finance minister, said:
We are just over 12 months away from formally exiting the EU without a clearly agreed path in terms of our on-going access to key EU markets - this remains the biggest uncertainty hampering economic growth and investment and dragging our economy down.We are just over 12 months away from formally exiting the EU without a clearly agreed path in terms of our on-going access to key EU markets - this remains the biggest uncertainty hampering economic growth and investment and dragging our economy down.
The UK government have indicated they will allocate £3bn over 2018-19 and 2019-20 for expenditure on Brexit preparations, but that the Scottish Government will only receive 2.5%, or £37m, of the funding allocated in 2018-19. No details on 2019-20 funding have been provided.The UK government have indicated they will allocate £3bn over 2018-19 and 2019-20 for expenditure on Brexit preparations, but that the Scottish Government will only receive 2.5%, or £37m, of the funding allocated in 2018-19. No details on 2019-20 funding have been provided.
It is deeply frustrating that money we are receiving is significantly short of a full Barnett share of the funding allocated at the UK level. Scottish Ministers will now carefully consider how these resources should be allocated to meet priority areas of expenditure and whether they are sufficient for the challenge ahead. We will not allow spending on Scottish public services to be diverted to meet the cost of a damaging UK Brexit.It is deeply frustrating that money we are receiving is significantly short of a full Barnett share of the funding allocated at the UK level. Scottish Ministers will now carefully consider how these resources should be allocated to meet priority areas of expenditure and whether they are sufficient for the challenge ahead. We will not allow spending on Scottish public services to be diverted to meet the cost of a damaging UK Brexit.
The government is theoretically committed to get net migration below 100,000 per year “Theoretically”, because many ministers believe the target is unachievable. And the OBR does not believe it will be hit either. This is what it says in a passage about its Brexit assumptions.The government is theoretically committed to get net migration below 100,000 per year “Theoretically”, because many ministers believe the target is unachievable. And the OBR does not believe it will be hit either. This is what it says in a passage about its Brexit assumptions.
Specifically, as regards the economy forecast, we assume that:Specifically, as regards the economy forecast, we assume that:
The UK adopts a tighter migration regime following departure from the EU than that currently in place, but not sufficiently restrictive to reduce net inward migration to the desired ‘tens of thousands’.The UK adopts a tighter migration regime following departure from the EU than that currently in place, but not sufficiently restrictive to reduce net inward migration to the desired ‘tens of thousands’.
Three years ago this week, George Osborne proudly announced a new Help To Buy ISA that would (he claimed) get first-time buyers scrambling onto the housing ladder.Three years ago this week, George Osborne proudly announced a new Help To Buy ISA that would (he claimed) get first-time buyers scrambling onto the housing ladder.
Under the plan, the government would provide a £50 top-up for every £200 saved for a deposit on a home (up to a £12,000 deposit).Under the plan, the government would provide a £50 top-up for every £200 saved for a deposit on a home (up to a £12,000 deposit).
A classic pre-election vote-winner, you might think. However, it was later dubbed a ‘scandal’ after it emerged that the government wouldn’t actually chip in until the home had been bought.A classic pre-election vote-winner, you might think. However, it was later dubbed a ‘scandal’ after it emerged that the government wouldn’t actually chip in until the home had been bought.
And now, the OBR has slashed its forecasts for the cost of the scheme, as take-up has been much weaker than it expected.And now, the OBR has slashed its forecasts for the cost of the scheme, as take-up has been much weaker than it expected.
The watchdog says:The watchdog says:
The original costing estimated that cumulative Government expenditure would reach nearly £700m by the end of 2017-18. But take-up so far has been well below expectations and the total value of payments in the first 22 months of the scheme – to September 2017 – was just £104m.The original costing estimated that cumulative Government expenditure would reach nearly £700m by the end of 2017-18. But take-up so far has been well below expectations and the total value of payments in the first 22 months of the scheme – to September 2017 – was just £104m.
We have revised down our forecast by a cumulative 23 per cent relative to our previous forecast. Compared to the original costing, cumulative spending is around 80 per cent (some £1.7bn) lower up to the end of 2019-20We have revised down our forecast by a cumulative 23 per cent relative to our previous forecast. Compared to the original costing, cumulative spending is around 80 per cent (some £1.7bn) lower up to the end of 2019-20
This is from Sky’s economics editor Ed Conway.This is from Sky’s economics editor Ed Conway.
It isn't so much that the UK is slumping. It's that every other major economy is accelerating, leaving the UK behind. Striking chart from the latest OBR report https://t.co/mxIcxRfe6q pic.twitter.com/vrHWMLUvSWIt isn't so much that the UK is slumping. It's that every other major economy is accelerating, leaving the UK behind. Striking chart from the latest OBR report https://t.co/mxIcxRfe6q pic.twitter.com/vrHWMLUvSW
It has attracted this comment from Rupert Harrison, chief of staff to George Osborne when he was chancellor.It has attracted this comment from Rupert Harrison, chief of staff to George Osborne when he was chancellor.
Great chart which captures the Brexit effect - no disaster but we have missed out on this latest global boom. The risk now is that (apart from the US which is absorbing a big fiscal boost) that global boom appears to be fading a little https://t.co/a9hNPwYqMQGreat chart which captures the Brexit effect - no disaster but we have missed out on this latest global boom. The risk now is that (apart from the US which is absorbing a big fiscal boost) that global boom appears to be fading a little https://t.co/a9hNPwYqMQ
This is from the Press Association’s Ian Jones.This is from the Press Association’s Ian Jones.
You have to go right back to 1875-1879 for the last time the UK economy grew by 1.5% or below for five years in a row. #SpringStatementYou have to go right back to 1875-1879 for the last time the UK economy grew by 1.5% or below for five years in a row. #SpringStatement
Here are some comments from opposition MPs on the spring statement. MPs were responding in the House of Commons.Here are some comments from opposition MPs on the spring statement. MPs were responding in the House of Commons.
From John McDonnell, the shadow chancellor:From John McDonnell, the shadow chancellor:
I say to the chancellor: his complacency today is astounding.I say to the chancellor: his complacency today is astounding.
We face – in every public service – a crisis on a scale we’ve never seen before.We face – in every public service – a crisis on a scale we’ve never seen before.
Hasn’t he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors?Hasn’t he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors?
They are telling him they can’t wait for the next budget. They’re telling him to act now.They are telling him they can’t wait for the next budget. They’re telling him to act now.
For eight years they’ve been ignored by this government. And today - they’ve been ignored again.For eight years they’ve been ignored by this government. And today - they’ve been ignored again.
The chancellor has proclaimed that there is light at the end of the tunnel. But this shows just how cut off from the real world he is.The chancellor has proclaimed that there is light at the end of the tunnel. But this shows just how cut off from the real world he is.
Last year growth in our economy was among the lowest in the G7 and the slowest since 2012.Last year growth in our economy was among the lowest in the G7 and the slowest since 2012.
Wages are lower now - in real terms - than they were in 2010 – and they’re still falling.Wages are lower now - in real terms - than they were in 2010 – and they’re still falling.
We face – in every public service – a crisis on a scale we’ve never seen before.We face – in every public service – a crisis on a scale we’ve never seen before.
Hasn’t he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors?Hasn’t he listened to the doctors and nurses, the teachers, the police officers, the carers and even his own councillors?
They are telling him they can’t wait for the next budget. They’re telling him to act now.They are telling him they can’t wait for the next budget. They’re telling him to act now.
From Ian Blackford, the SNP leader at Westminster:From Ian Blackford, the SNP leader at Westminster:
The progress of this government in readying for Brexit has been nothing short of shameful.The progress of this government in readying for Brexit has been nothing short of shameful.
The UK government’s own analysis tells us that under all scenarios, Scotland would suffer a relatively greater loss in economic output than the United Kingdom as a whole.The UK government’s own analysis tells us that under all scenarios, Scotland would suffer a relatively greater loss in economic output than the United Kingdom as a whole.
A no deal scenario would be significantly devastating, threatening to reduce growth by a massive 9% over 15 years.A no deal scenario would be significantly devastating, threatening to reduce growth by a massive 9% over 15 years.
Make no mistake that a hard Brexit is going to hit the pockets of families, is going to lead to a loss in tax revenue expectations. It’s therefore going to affect spending on public services, and yet the chancellor is silent on the risks to our economy.Make no mistake that a hard Brexit is going to hit the pockets of families, is going to lead to a loss in tax revenue expectations. It’s therefore going to affect spending on public services, and yet the chancellor is silent on the risks to our economy.
From the Lib Dem leader Sir Vince Cable:From the Lib Dem leader Sir Vince Cable:
The spring statement was a non-event. The OECD [see 11.33am] gave us the clearer picture - that the economy is bumping along the bottom of the G20, well behind the likes of Australia, Canada and the euro area.The spring statement was a non-event. The OECD [see 11.33am] gave us the clearer picture - that the economy is bumping along the bottom of the G20, well behind the likes of Australia, Canada and the euro area.
The OBR’s fresh forecasts are still a long way behind the figures estimated in March 2016 before the EU referendum.The OBR’s fresh forecasts are still a long way behind the figures estimated in March 2016 before the EU referendum.
It is time the government was honest with the public: there will need to be tax increases to pay for the NHS and social care, police and schools.It is time the government was honest with the public: there will need to be tax increases to pay for the NHS and social care, police and schools.
From the Green MP Caroline Lucas:From the Green MP Caroline Lucas:
I have to say that the levels of hypocrisy from this government is quite extraordinary.I have to say that the levels of hypocrisy from this government is quite extraordinary.
How can he pledge to be improving air quality while simultaneously boasting of undertaking the largest road building programme since the 1970s.How can he pledge to be improving air quality while simultaneously boasting of undertaking the largest road building programme since the 1970s.
How can he say that the plastics crisis is urgent and then propose a deadline for the elimination of plastics in a quarter of a century’s time.How can he say that the plastics crisis is urgent and then propose a deadline for the elimination of plastics in a quarter of a century’s time.
Where is the latte levy, where is the deposit scheme, where is the urgency from this action. Why is there such a gulf between government action and the words.Where is the latte levy, where is the deposit scheme, where is the urgency from this action. Why is there such a gulf between government action and the words.
Nick Macpherson, former Permanent Secretary to the Treasury (the top civil servant), suggests Philip Hammond is right to keep his fiscal firepower in case the UK suffers an economic shock....Nick Macpherson, former Permanent Secretary to the Treasury (the top civil servant), suggests Philip Hammond is right to keep his fiscal firepower in case the UK suffers an economic shock....
Sensible OBR forecast. Sensible statement by Mr Hammond. Good to see public debt could fall next year. Need headroom against future shocks.Sensible OBR forecast. Sensible statement by Mr Hammond. Good to see public debt could fall next year. Need headroom against future shocks.