LONDON — The UK will borrow £10 billion ($US12.2 billion) less in 2017 than previously forecasted by the Office for Budgetary Responsibility, according to accounting firm PwC.
Total borrowing will fall from £58 billion this year to just £10 billion in 2022, PwC said in an email, saving a cumulative £45 billion for the Treasury compared to forecasts.
Despite this boost to finances, Chancellor Philip Hammond is unlikely to unveil any spending increases in his Budget announcement this month, preferring instead to see how the Brexit talks pan out.
“This may give the Chancellor some wiggle room to spend a few billion pounds more on political priorities like the NHS and social care, but we don’t expect a big giveaway Budget,” said John Hawksworth, chief economist at PwC.
“Instead, we expect the Chancellor to use most of the potential £45 billion windfall from lower cumulative public borrowing over the period to 2021/22 to reduce the public debt to GDP ratio faster than previously projected.
“Given the economic and political uncertainties surrounding the Brexit negotiations, upcoming European elections and the policies of the new US administration, this seems like a prudent path to take.”
The Financial Times reported this week that Hammond is unwilling to spend the £27 billion set aside in last year’s Autumn Statement to deal with possible Brexit headwinds, preferring to save it for the two-year negotiating period that begins once Article 50 is triggered.
Hammond will deliver his first budget as Chancellor on March 8. The NHS, social care, prisons, schools, and business rate relief are all pressing issues that could be potentially eased with extra spending.
However, the Chancellor is understood to be cautious about drawing conclusions before Brexit negotiations have officially begun and is keen to retain some budgetary room to manoeuvre.
This is despite the UK economy consistently performing better than expected since last June’s vote to leave the European Union. Figures this week show Britain is on track to borrow less than forecast this year.
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