LONDON (Reuters) - Britain’s official budget watchdog said chancellor Philip Hammond’s spending plans for the next two years represent a “significant giveaway” and that debt will only be cut through share sales and statistical reclassification.
“Faced with a weaker outlook for the economy and the public finances, and growing pressures on public services following years of cuts, the Government has chosen to deliver a significant near-term fiscal giveaway,” the Office for Budget Responsibility (OBR) said.
Hammond’s budget choices would boost borrowing by 2.7 billion pounds next year and by 9.2 billion pounds in the 2019-20 tax year, equivalent to 0.4 percent of gross domestic product, the OBR said.
Fractional falls in public sector net debt as a share of GDP were achieved mostly through sales of shares in Royal Bank of Scotland and reclassifying some public-housing providers as private-sector bodies.
“If the sector faced serious financial difficulties in the future, it seems equally likely that the Government of the day would choose to stand behind it whatever its statistical classification,” the OBR said.
Reporting by David Milliken and Paul Sandle; editing by Stephen Addison