Philip Hammond can blow £15billion to end austerity without wrecking public finances, experts claim


PHILIP Hammond can spend £15 billion to end austerity without busting his borrowing goals – experts declared yesterday.

The Institute for Fiscal Studies said a Treasury tax windfall meant there was enough leeway to show cuts were “really coming to an end” if Britain has an orderly Brexit.

Philip Hammond can blow £15billion to end austerity without busting his borrowing goals
AP:Associated Press

IFS director Paul Johnson backed up the Chancellor’s Spring Statement warning that a No Deal Brexit would wreck the public finances.

But he said spending £15 billion in this summer’s Spending Review was possible without taking borrowing above 2 per cent of GDP – or economic output – or seeing debt rise as a proportion of national income.

“Extra spending of that sort would, finally, allow the Chancellor to say with rather more conviction that austerity really was coming to an end,” Mr Johnson said.

“It would mean spending rising not just overall in real terms, but even for ‘unprotected’ departments, and as a fraction of national income.”

But he warned: “Of course if things go wrong with Brexit, or indeed for other reasons, then that headroom could be removed.”

The Resolution think tank on Wednesday said that on current plans, ‘unprotected’ government departments will see 2 per cent cuts between 2019-2020 and 2023-2024.

But spending £7.9 billion would ensure day-to-day budgets kept pace with the size of the economy.

The Chancellor on Wednesday offered to splash £26 billion if MPs delivered a “smooth” Brexit in one of the biggest political bribes in history.

He promised a huge pot for councils, the police, defence, the environment if the Treasury was allowed by an orderly EU exit to “fire up” the economy.


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