Hammond said the Office for Budget Responsibility has revised its growth projection for the UK economy in 2017 down to 1.4% from 2.2% and to 1.7% in 2018 from 2.1%. Projections for 2019 and 2020 were unchanged at 2.1%.
While noting the ‘strength and resilience’ the economy has shown since the Brexit vote, Hammond explained that the uncertainty generated by the upcoming exit process is expected to have a significant impact.
He also formally abandoned the government target to achieve a budget surplus by 2020 trumpeted by his predecessor George Osborne. Borrowing will be £68.2bn this year, followed by £59bn next year, £46.5bn in 2018 and £21.9bn in 2019, Hammond said. Overall public sector net borrowing will fall from 4% of GDP last year to 3.5% this year.
Another notable aspect of the address was Hammond bemoaning the gap between the productivity of British workers and counterparts elsewhere. He said the UK lags behind the US and Germany by 30%, France by 20% and Italy by 8%.
Hammond also pointed to a big gap in productivity between the London area and other parts of the country.
A £400m boost to venture capital spending delivered via the British Business Bank, a £2.3bn housing infrastructure fund to help provide 100,000 new homes in high demand areas and £1.4bn to fund 40,000 new 'affordable homes' were other notable announcements.
The Chancellor also confirmed an expected change in how he will report to the country. The Budget will be delivered in Autumn from 2018, and a lighter-weight statement delivered in Spring each year instead.