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Business

Deficit makes Brexit budget boost tough in UK

Opening sequence

Opening sequence

Business

Deficit makes Brexit budget boost tough in UK

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COMING UP:Deficit makes Brexit budget boost tough in UK

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Transcript

00:00:00
>> Phillip Hammond may not have much room to give the UK a Brexit budget boost. An unexpected spike in public borrowing leaving the UK Chancellor with less cash to spare. Britain's budget shortfall hitting just over 10.5 billion pounds in August. That's half a billion higher than forecast by economists.
00:00:19
Though any link to the shock Brexit vote is hard to prove. Jeremy Gaunt is Reuters Chief European Desk Editor in economics and politics.>> It's not necessarily totally linked to Brexit, but some of it may have come from lower VAT receipts, value added tax receipts, which would indicate that people were spending a bit less going ahead towards the vote.
00:00:42
>> Hammond has already dropped a target of turning the deficit into a surplus by 2020. He had been expected to open the public spending taps at least a little. The Chancellor saying he's open to funding new infrastructure projects, though he's toned down earlier talk of a major fiscal reset.
00:01:00
Longer term, much hangs on how Brexit turns out.>> If the economy deteriorates rapidly, then they'll have to spend to get out of it, and if they do that, then the deficit will get bigger. But if the Brexit economy is benign, then the posterity will probably return, or at least some form of of cost cutting.
00:01:24
The OACD signals that it expects our growth in Britain to halve next year from what they had originally projected, so that doesn't bow terribly well.>> Britain's budget deficit was just over 4% of economic output last year. That's well down from the peak of 10%. But still among the highest for developed nations.
00:01:46
However Brexit turns out, balancing the books looks like a distant prospect.