The Chancellor has given first-time buyers a boost by abolishing stamp duty on homes up to £300,000, but there were gloomy forecasts about the health of the economy.
Philip Hammond had been expected to reveal measures to try to win back the young vote in the Autumn Budget, and chief among these was the stamp duty giveaway – a move the Government says will save £1,660 on average.
But Britain’s fiscal watchdog has warned the policy could be counter-productive, while also calling into question the Chancellor’s target for eradicating the deficit.
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The Office for Budget Responsibility (OBR) has said the stamp duty move is “expected to increase house prices” and the main beneficiaries will be those who already own a home.
As few as 3,500 additional home purchases a year will be made as a result of the policy, it estimated.
Mr Hammond said the economy “continues to grow, continues to create more jobs than ever before and continues to confound those who seek to talk it down” and pledged to “look forwards not backwards”.
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But growth has been revised down for the next five years due to poor productivity, which Mr Hammond said “continues to disappoint”.
GDP is now expected to grow by 1.5% in 2017 – down from March’s 2% forecast – 1.4% in 2018, 1.3% in 2019 and 2020, before experiencing an uptick in 2021 (1.5%) and 2022 (1.6%).
On the deficit, OBR chairman Robert Chote told Sky’s Faisal Islam that Britain is on course to balance the books around 2030, rather than during the next Parliament.
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The watchdog described the Budget as a “significant near-term fiscal giveaway” which would add £2.7bn to borrowing in 2018 and £9.2bn in 2019-20.
It said: “The persistence of weak productivity growth does not bode well for the UK’s growth potential in the years ahead.”
Pledging to ensure Britain is “fit for the future”, Mr Hammond also announced an emergency £2.8bn cash injection for the “under pressure” NHS – including £350m this winter – and £3bn to plan for Brexit.
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Housing was a prime focus, with the Chancellor committing the Government to building 300,000 extra new homes a year by the middle of the next decade.
At least £44bn of capital funding, loans and guarantees to support the housing market will be provided, he told MPs.
Labour leader Jeremy Corbyn said Britain had been “let down” by the Budget, branding the Government “no longer fit for office”.
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Sir Vice Cable, leader of the Liberal Democrats, said Britain had gone from “top of the growth league to deep into the relegation zone”.
On the extra money for the NHS there was a decidedly muted reaction from inside the health service. One trust chief executive told Sky News: “It is not enough. We won’t even be standing still at that level.”
The Chancellor also moved to quell the controversy over the Universal Credit welfare reforms, with a £1.5bn package unveiled to cut the waiting time for payments and make it easier for claimants to get an advance.
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Other announcements included:
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Treasury aides insisted Mr Hammond had not forfeited the right to the moniker “fiscal Phil” as a result of his Budget splurge, with the spending funded from “headroom” built up in previous announcements.