Philip Hammond, a Chancellor who Theresa May hoped to have sacked by now, was determined to resonate optimism in his Spring Statement. “Any Eeyores in the chamber are over there”, he declared, gesturing towards the Labour benches. “I am positively Tigger-like.”
The independent Office for Budget Responsibility, it is true, increased its GDP growth forecast for 2018 (from 1.4 per cent to 1.5 per cent) and revised down government borrowing (from 2.4 per cent of GDP to 2.2 per cent). But this was the most modest of improvements. For the first time in modern history, economic growth is expected to fall below 2 per cent in every forecast year (1.3 per cent in 2019, 1.3 per cent in 2020, 1.4 per cent in 2021 and 1.5 per cent in 2022). Indeed, growth in the final two years has been revised down. The UK will remain one of the slowest-growing G7 economies. And as OBR head Robert Chote told me earlier this year, Britain’s anaemic performance can be partly attributed to the government’s austerity programme and Brexit.
Though Hammond declared that “forecasts are there to be beaten”, he knows that the strain EU withdrawal will impose on the economy and the risk of a new recession (overdue by historic standards) means the projections may yet prove too optimistic.
The Chancellor might have cause for cheer (having kept his job) but the country does not. Average wages are not forecast to return to their pre-crisis peak until 2025 (17 years later). The Spring Statement did not, as some headlines have proclaimed, herald “the end of austerity”. Working age benefits have again been frozen this year and government departments continue to endure spending cuts or meagre increases. Austerity’s social costs are visible to all in homelessness (up 169 per cent since 2010), rising crime, overburdened schools and hospitals, unrepaired roads, uncollected bins and closed libraries and children’s centres.
There is “light at the end of the tunnel,” insisted Hammond, deploying the cliche beloved of Conservative chancellors. But for too many, the light is not merely dim but invisible.
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