UK Budget: Fostering productivity and ensuring sustainability amid uncertainty - Natixis

Sylwia Hubar, Research Analyst at Natixis, points out that UK public deficit is expected to increase marginally in 2017-18 before taking a steadily downward path thereafter.

Key Quotes

“Economy is set to expand at an average annual pace of 1.4% until 2020, with a marked downward revision of 0.5pp in 2017. Better fiscal performance has provided Chancellor Hammond with some fiscal room to allocate more money to Brexit contingency plans, help households with finances under pressure, and boost continually disappointing productivity.” 

“UK public finances should continue improving over the coming years as long as interest rates remain low. The BoE will be cautious to increase interest rates during the period of Brexit negotiations and will most likely keep the status quo throughout 2018.”