Light at end of debt tunnel?

Chancellor to deliver Spring Statement on Tuesday

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Will Philip Hammond have a spring in his step, or will there be an extended winter?

By Daniel J. McLaughlin

The spring budget is no more. There used to be two major announcements on tax and spending every year: the spring budget and the autumn statement. However, when Philip Hammond became chancellor in 2016, he decided to shake things up a bit. The budget would occur in the autumn, and the statement in the spring.

The statement serves as a diagnosis of the state of the economy and the nation's public finances, and the budget is supposed to serve as the remedy.

There are many hoping that the Chancellor could offer hope, and signal the end of austerity in Britain.

A business leader in the Guardian argues that the spring statement is a chance to "sweeten years of austerity".

Although the remarks to the Commons on Tuesday will be "policy-neutral", it could give Mr Hammond a chance to "look in the rear-view mirror and see what a missed opportunity the past eight years have been".

He has the money to ease austerity. According to official figures, between January 2017 and January 2018, there was a surplus in the government's day-to-day spending of £3 billion. The overall public spending deficit is below two per cent.

After switching the budget and the statement, the chancellor could have done with them in their original order. In November, when he presented the autumn budget, Mr Hammond revealed a gloomy, economic forecast with very few workable solutions.

A few months down the line, he has a "surprisingly good story to tell" but the statement will be a 15-minutes update (down from an hour) without any tax or spending announcements, despite having the money to spend on them.

The Independent reports that there have been higher-than-expected tax receipts, and the first surplus on day-to-day spending since 2002. Mr Hammond could have a windfall of between £7 billion and £11 billion.

Despite the positives, he has refused to mark the end of austerity. Appearing on the Andrew Marr Show, he said the national debt was still too high: "There is light at the end of the tunnel... but we are still in the tunnel at the moment." He added that it would be wrong to pour "every penny" into additional public spending.

"Austerity has worked" - or is still working - is the message of the day. The same economic strategy hat has been likened to a "leeches-and-mercury remedy", akin to an 18th century doctor than a 21st century economic strategist. Mr Hammond believes that there is a light at the end of the tunnel, but it was the Tories who put the nation in the tunnel.

The New Statesman examines the cost of austerity on Britain: "Homelessness has risen by 169 per cent, the NHS is buckling under the strain of rising demand, and child poverty has reached its highest level since 2010."

Philip Hammond will deliver his spring statement to the Commons on Tuesday.

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