Autumn Budget 2017: OBR Significantly Cuts UK Growth Forecasts; Hammond Sets Aside Further £3bn For Brexit

In the second and final Budget of 2017, Hammond revealed economic growth in 2017 is only expected to reach 1.5.%, lower than the previous forecasts in March of 2%.

The OBR's forecast for 2018 has dropped from 1.6% to 1.4%, and it is also set to fall to 1.3% in 2019 and 2020, before rising slightly to 1.5% in 2021 and 1.6% in 2022. 

Inflation is expected to peak at 3% this quarter before steadily falling over the following quarters. 

Budget 2017: OBR significantly upgrades UK growth forecast for this year

In a Budget where the Chancellor said he was trying to take a "balanced approach" to fiscal policies and listening to "frustrated families", he said the OBR had found productivity growth had remained "stubbornly flat", leading to the downgrade in forecasts.

Turning to the budget deficit, the Chancellor said borrowing is expected to stand at 2.4% at the end of the 2017-18 fiscal year, at 1.9% in 2018-19, 1.6% in 2019-20 and 1.5% in 2020-21.

Net debt is expected to peak at 86.5% of GDP this year before falling to 86.4% in 2018 and 86.1% in 2019. Hammond said this was the first sustained decline in net debt in 17 years.  

Industry reaction: Hammond protects 'Brexit war chest' in 'anti-Goldilocks' 2017 Budget

Borrowing is forecast to be £49.9bn this year, some £8.4bn lower than forecast in the Spring Budget.

Hammond said "borrowing will fall in every year of the forecast"  from £39.5bn next year to £25.6bn in 2022-23, to reach its lowest level in 20 years.

Brexit's 'critical phase'

Opening his Autumn Budget speech and referring to the the UK's departure from the European Union, Hammond said: "The future is full of change, new challenges and new opportunities.

"We are looking forwards, not backwards and will seize the opportunities for Britain."

He added the UK government is in a "critical phase" of Brexit negotiations where it is "seeking a deep and special partnership" with the EU.

"The government will pursue progress on this as a top priority in the coming weeks.

"We are determined to ensure the country is prepared for every possible outcome."

He added £700m had already been invested in Brexit but he was setting aside a further £3bn to prepare the country for departure.