Chancellor of the Exchequer Philip Hammond. Picture: REUTERS/TOBY MELVILLE
Chancellor of the Exchequer Philip Hammond. Picture: REUTERS/TOBY MELVILLE

London — British Chancellor of the Exchequer Philip Hammond said on Monday the era of spending cuts introduced since the financial crisis was coming to an end, though he warned a no-deal Brexit would put plans to loosen the country’s purse strings at risk.

“I can report to the British people that their hard work is paying off and the era of austerity is finally coming to an end,” Hammond told MPs, as he started to announce his annual tax and spending plans this week.

Hammond is facing pressure to end almost a decade of spending cuts that have limited public services and spurred support for the opposition Labour Party and its socialist leader, Jeremy Corbyn. Labour, which is neck-and-neck in the polls with the Conservatives, said Britain must spend more than £100bn on public services to reverse the impact of a decade of austerity.

He received a boost from his fiscal watchdog. The Office for Budget Responsibility said borrowing will be £11.6bn lower than it forecast in the spring statement. The chancellor also said the OBR had boosted its 2019 growth forecast to 1.6% from 1.3% in March, to 1.4% from 1.3% in 2020, while 2021’s was left at 1.4%.

But he repeated that the rosier outlook would be undermined if the UK crashes out of the EU without a deal, though he also reiterated that on the flipside, an agreement would unleash a tide of investment that boost consumer confidence.

“I expect that the ‘deal dividend’ will allow us to provide further funding for the Spending Review. The hard work of the British people is paying off. Austerity is coming to an end,” he said.

He also committed an additional £2bn for central government departments to prepare for Brexit and said he would retain the £15bn “rainy day” fund that he has been keeping aside in case of no deal and “retaining firepower to intervene if the economy needs more support in the coming months”.