Analysts suggested, what will be the budget of the UK to 2018

© Fotolia / by-studioБиг Ben and the houses of Parliament in London. Archival photoAnalysts suggested, what will be the budget of the UK to 2018© Fotolia / by-studio

Autumn UK budget for 2018, which will be presented on Wednesday, is unlikely to contain tough measures. On the background of the difficult situation inside the Conservative party and the slow negotiations on a Brexit, the government is likely to rush to support the business and the social sector, according to economists surveyed by RIA Novosti.

Since the autumn of this year, the Finance Minister of great Britain Philip Hammond will represent the project budget once a year, abandoning the 42-year-old tradition, according to which the financial document of the state published twice a year in spring and autumn. In November last year the Minister of Finance announced that henceforth the main project of the budget with the planned changes will be presented in the autumn, in advance of the new tax year. Spring report of the Treasury will continue, but in 2018 will contain a significant fiscal changes.

New forecasts

First, why wait for the experts — changes in economic forecasts the office for budget responsibility in the UK (Office for Budget Responsibility, OBR) in the context of the Brexit. According to research company Oxford Economics, OBR, this time can be significantly reduced expectations for industrial production growth and lower long-term growth forecast for Britain’s GDP to 1.5%. As a result, the amount of borrowing will be higher by about 1% of GDP in 2020-2021 years.

Experts at the EY ITEM Club expect that the forecast for GDP growth in 2017 will be improved to 1.6-1.7% with regards to year ago 1.4%, but is below the spring forecast of 2%. It is also likely to reduce hozaystvennih in the current fiscal year 2016-2017 3 billion pounds to around 65 billion pounds.

In November last year the OBR downgraded its growth forecast for the country’s economy on the background of a Brexit to 1.4% from 2.2%. However, contrary to expectations, the British economy was growing more rapidly. As a result, this spring, the forecast was improved to 2% from 1.4%. The GDP growth forecast in 2018 is 1.6%, in 2019 – 1.7 percent. To the level of 2% economic growth will return to 2021, said in OBR in the spring.

Taxes and investments

As for fiscal policy, experts do not expect any austerity measures from the conservative government. The major changes of taxation was announced in the «spring budget». Besides, on the background of the difficult situation inside the conservative party and the sluggish negotiations on Brexit, the government is more willing to go to mitigate the social sphere, analysts say.

Finance Minister Hammond has announced that the new budget plan will include line costs for the construction of 300 thousand new homes a year to address the problem of affordable housing. Moreover, it will be done not only through the allocation of money from the state Treasury but also by providing incentives to small construction companies. EY ITEM Club do not exclude that the statement of the Minister for the environment may contain other measures to support business.

In addition, the government has pledged to invest an additional 1.7 billion pounds in the development of transport infrastructure in the framework of the new budget. Earlier in October, Hammond said that £ 400 million will be invested in the development of transport infrastructure in the North of the country. More than 100 million pounds of this amount will be spent on construction of additional roads and intersections to improve traffic nodes. About 300 million pounds will be invested in the development of rail links in the North of the country in order to provide fast service between Liverpool, Manchester, Sheffield, York and Leeds.

Earlier this year, when the budget authority has allocated an additional 1,1 billion pounds on development of transport infrastructure, namely English local transport system.

Criticism of the labour party

The labour party, in particular its «shadow» Chancellor John McDonnell has already criticized the budget policy of the conservatives. In his opinion, an urgent need to introduce an «emergency budget» to support the social sector in the UK, which, in his opinion, is in crisis. Politician calls for end to restrictions in the financing of the public sector, stop the privatization of healthcare and to build social housing.

McDonnell believes that social spending, including health, social services, schools and local government needs to allocate about 17 billion pounds. You also need to bring order to taxation, making the rich pay the tax they Harbor.

The Conservative party in response to this said that such a policy labour could lead to higher debt, higher taxes and job cuts.