Philip Hammond has said he could loosen his grip on public spending in the autumn, but has rejected calls by Labour and some Conservatives to announce the end of austerity in his spring statement on Tuesday.
Speaking to the BBC ahead of his half-yearly update on the country’s finances, the Chancellor said: “There is light at the end of the tunnel because what we are about to see is debt starting to fall after it’s been growing for 17 continuous years.”
While stressing the Government remains committed to bringing down public debt, he added that this is “a very important moment for us but we are still in the tunnel at the moment”.
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Britain’s budget deficit fell to 2% of annual economic output this financial year, its lowest since 2002 and way below the 10% in 2010 when the Coalition began cutting spending sharply.
Faced with uncertainty about what Brexit will mean for the world’s sixth-biggest economy and frustration among voters with eight years of austerity, “Hammond has already pushed back a target of wiping out the deficit into the mid-2020s”, Reuters reports.
“But he remains under pressure from the opposition Labour Party and some lawmakers in his Conservative party to spend more on the over-stretched health system and other services,” says the news agency.
Appearing on the BBC’s Andrew Marr Show, John McDonnell, the shadow chancellor, said recent economic figures were “not a matter for celebration”. He added that the Chancellor had shifted the deficit onto the shoulders of NHS managers, headteachers and local government leaders, who are “facing a financial crisis because of government cutbacks”.
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