Chancellor Phillip Hammond announced government borrowing is predicted to increase by £110 billion over the next 4 years, largely due to the looming repercussions of Brexit. As well as the direct costs leaving the EU brings, a large proportion is predicted due to a drop in migration and reduced productivity. (Source: Office for Budget Responsibility)
The government will need to borrow more money as migration reduces, because despite the current popular anti-immigration sentiment being peddled by many media channels and politicians, migration is good for the economy, for productivity and for employment.
Although the government has now abandoned hope for Osborne’s unachievable plan for zero deficit by 2020, the austerity blueprint remains. Whilst several high profile plans have experienced U-turns or been diluted by the House of Lords, austerity measures will take £30 a week from around 300,000 sick and disabled people in receipt of ESA, in a bid to cut £455 million from the welfare bill. This will take effect from April 2017.
Nobody really knows yet the full effects Brexit will have on our economy. All forecasts predict financial downturns, but it remains to be seen just how deep and long this will be. This was the first Hammond/May budget announcement, and for many it will feel about as helpful to them as the other Hammond/May partnership showing them how a Lamborghini handles round the track. Unfortunately for the average household and the government, forecasts suggest the books are going to get even harder to balance.