Finance minister Sajid Javid announced to deliver Britain’s first post-Brexit budget statement on Nov. 6, less than a week after the country’s deadline for leaving the European Union, if it exits with a deal. It will be Javid's first budget since he became chancellor in July.
"This is the right and responsible thing to do - we must get on with governing," Javid said. “I will be setting out our plan to shape the economy for the future and triggering the start of our infrastructure revolution,” he added in a statement. However, in the event of a no-deal Brexit - which would cause a major shock to the world’s fifth-biggest economy - the government would act quickly to outline its approach and “take early action to support the economy, businesses and households,” followed by a budget in the weeks after, the government said. Prime Minister Boris Johnson says he will take Britain out of the EU on Oct. 31, if necessary without a transition deal to soften the economic turmoil.
But lawmakers have passed legislation aimed at forcing him to seek a delay if there is no transition. The opposition Labour Party said the budget announcement would probably be aimed at wooing voters before an early election that Johnson is demanding. “We expect more of the same. An electioneering stunt rather than a budget to rebuild our stalling economy and reset the direction of our country,” John McDonnell, Labour’s top finance official, said.
The lack of the normal 10 weeks’ notice of a budget date puts the Office for Budget Responsibility, the UK fiscal watchdog which produces economic forecasts for a budget, in a difficult position. Robert Chote, OBR chair, has said the watchdog would do its best to publish a finalised forecast without the normal time, but would not be able to take different Brexit scenarios into account.
Javid has already announced the biggest increase in day-to-day public spending in 15 years, putting borrowing on course to overshoot a cap set by his predecessor, Philip Hammond. Javid has suggested he is prepared to borrow more in the future to take advantage of record-low borrowing costs. Britain has steadily cut its budget deficit from almost 10% of gross domestic product in 2010 to just under 2% now.
But analysts have warned that Javid could end up weakening Britain’s budget credibility by making big spending pledges at a time when the economy has slowed and the outcome of Brexit remains so unclear. Public debt has more than doubled since before the financial crisis to more than 80% of gross domestic product. Like the government, the Bank of England also faces limits on how much help it can give the economy.
