Philip Hammond Axes George Osborne’s Deficit Reduction Timetable And Vows To Borrow To Invest

Philip Hammond today tore up Government plans to get the country running a surplus by 2020 and indicated he would be happy to borrow more cash.

The Chancellor of the Exchequer is ditching his predecessor George Osborne’s timetable for abolishing the UK’s financial deficit, claiming the result of the EU referendum means “the circumstances have changed.”

Hammond also revealed he would be happy to borrow money in order to invest in key projects, something ruled out by Osborne when he was in charge of the Treasury.

The Chancellor told the BBC this morning he remains committed to eliminating the deficit, but did not give a timetable for when this would be achieved.

Speaking on Radio 4’s Today programme, Hammond said: “There is a distinction in my mind between investing in the things that will make Britain’s economy more efficient in the future, make transport systems work better, communications systems work better and simply spending more on our day-to-day process of government.

“We need to keep the lid on day-to-day spending, we need to make Government more streamlined and efficient but I do think there’s a case that we should look at very carefully for targeted high-value investment in our economic infrastructure which serves two purposes.

“In the short term it supports the economy, supports jobs and supports economic growth, and in the long term it helps to make Britain more productive.”

Reducing the UK’s deficit – the amount of money the Government has to borrow in order to fund its activities – was one of Osborne’s top priorities during his six years as Chancellor.

Osborne repeatedly missed his targets when it came to deficit reduction, and in March this year said a surplus in 2019/2020 would only be reached “in normal times when the economy is growing.”

In a speech to the Conservative Conference in Birmingham today, Osborne’s successor is expected to say that the “deficit remains unsustainable.”

He will add: “The fiscal policies that George Osborne set out were the right ones for that time.

“But when times change, we must change with them.

“So we will no longer target a surplus at the end of this Parliament.

“But make no mistake. The task of fiscal consolidation must continue.

“And it must happen within the context of a clear, credible fiscal framework that will anchor expectations, control day-to-day public spending, deliver value for money, and get us back living within our means.”

Hammond’s speech comes as sterling hit a 2016 low against the euro when the markets opened this morning.

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