Business bosses in the North East have given a lukewarm reception to Chancellor Philip Hammond’s hint that he might turn on the spending tap in this autumn’s Budget.
Mr Hammon’s Commons statement yesterday came as positive public finance figures pointed to “light at the end of the tunnel” following years of austerity but, in a low-key spring statement, he resisted pressure from Labour for an immediate boost to public service funds.
Shadow chancellor John McDonnell branded him “complacent” for making hospitals, schools and police wait another eight months for relief.
Ross Smith, director of policy, North East England Chamber of Commerce said: “While the Spring statement forecast continuing economic growth this can be described as steady at best. There is much still to tackle to create conditions in which our businesses can generate the jobs, investment and wealth we need.
“Despite the fact that this wasn’t designed to announce any new tax or spending plans the Chancellor ranged across a series of policy areas with a raft of new consultations.
“But two big issues loomed large over this and were barely mentioned. The success or otherwise of negotiations and planning for Brexit could yet render these forecasts largely irrelevant and businesses still have little detail to base their planning on.
“The Chancellor also failed to give any meaningful update on whether the gap between London and other regions is being closed, which again calls into question the commitment in the Conservative manifesto to make this the Government’s top priority.”
Mr Hammond hailed figures from the Office for Budget Responsibility (OBR) upgrading growth projections and forecasting falls in Government borrowing and national debt over the coming years.
The Government is set to run a “small” surplus on day-to-day spending in 2018/19, borrowing only for capital investment, said the Chancellor. The OBR expects Mr Hammond to hit his target of reducing the structural deficit below 2% in 2020/21 with £15.4 billion to spare.
Mr Hammond said the forecasts confirmed “the first sustained fall in debt for 17 years, a turning point in the nation’s recovery from the financial crisis of a decade ago. Light at the end of the tunnel”.
He gave a strong hint that austerity will be eased in November, telling MPs: “If, in the autumn, the public finances continue to reflect the improvements that today’s report hints at, then ... I would have capacity to enable further increases in public spending and investment in the years ahead while continuing to drive value for money to ensure that not a single penny of precious taxpayers’ money is wasted.”