British finance minister Philip Hammond is likely to announce a “steady as she goes” budget plan next week without big tax or spending surprises, and he will avoid setting a firm target for turning the budget deficit into a surplus, a lawmaker said.
Stephen Hammond, who is a friend of the minister and a member of his Conservative party but is not related to him, told the BBC that Philip Hammond would not announce on Wednesday a big increase in spending to help the economy during the uncertainty caused by June’s vote to leave the European Union.
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“Anyone who thinks Philip Hammond is going to be Keynes I think has probably misunderstood his economic philosophy,” Stephen Hammond said, referring to the economist John Maynard Keynes, who argued that aggressive public spending was the best way to fight economic downturns.
Britain’s new government has said it will drop the target of former finance minister George Osborne of a budget surplus by the 2019/20 financial year, the last of the current five-year parliament, but will still push to eliminate the deficit.
“Intellectually the framework remains that same, that we intend to achieve a fiscal surplus within the life of the next parliament,” Stephen Hammond said in a television interview broadcast late on Thursday.
He said any increase in spending on infrastructure would need to provide value for money and show a proven business case although he said Philip Hammond should not be considered “a boring accountant.”
While there could be some help for households such as a cut in fuel duty or measures to have savers, there would not be a big focus on what Prime Minister Theresa May has called Britain’s “just managing” group of families.
“This is the time I think for steady as she goes Autumn Statement,” Stephen Hammond said. “No rabbits out of a hat.” Hammond’s options for his first budget statement since taking over Britain’s Treasury in July are limited by the prospect of a slowdown in economic growth over the next few years as Britain negotiates its exit from the EU as well as its already weak public finances.
Many economists expect the British government is now on course to borrow 100 billion more pounds than it previously expected over the next five years.