Philip Hammond has cut the UK’s growth forecast down to 1.5% in his budget statement about the economy.
The chancellor downgraded the UK’s growth forecast for 2017 from 2% to 1.5%, as the economy starts to feel the effects of the UK leaving the European Union. He also cut the GDP growth forecasts for following years: 1.4% in 2018-19, 1.3% in 2019-20, and 1.5% in 2020-21.
The anaemic growth forecasts will limit the government’s ability to reduce the deficit and cut the size of the war chest Hammond had set aside to smooth the Brexit transition, with the chancellor committing to set aside a further £3bn over next two years, which he claims will prepare UK for every possible outcome as it leaves EU.
The gloomy outlook follows the decision by the Moody’s ratings agency to cut the UK’s credit rating from AAA1 to AAA2 last month, amid increasing concern that Britain will not be able to agree a future deal with the EU.