UK Treasury chief claims 'light at the end of the tunnel'

UK Treasury chief claims 'light at the end of the tunnel'
Britain's Chancellor Philip Hammond leaves 11 Downing Street to deliver his Spring Statement in Parliament, in London, Tuesday, March 13, 2018. (AP Photo/Kirsty Wigglesworth)

LONDON (AP) — Britain’s Treasury chief claimed Tuesday there is “light at the end of the tunnel” for the economy as public debt finally starts to drop a decade on from the rupture caused by the global financial crisis.

In an address to lawmakers, Philip Hammond said the British economy is set to grow by 1.5 percent this year instead of the previous 1.4 percent forecast. The estimate is provided by the independent Office for Budget Responsibility.

In spite of the upgrade, the economy is set to be one of the slowest-growing in the Group of Seven industrialized nations in 2018, as it was last year. The British economy has slowed since the country voted to leave the European Union in June 2016 as businesses reined in investment and consumer spending eased after inflation spiked following the pound’s fall.

Brexit is the biggest cloud hanging over the outlook. Britain is due to leave the EU, its biggest export market, in a little more than a year’s time but there’s uncertainty as to what the future trading relationship between the two will be.

Hammond said very little about the Brexit impact on the British economy but he laid out his hope of a “step forward” at next week’s meeting of EU leaders in Brussels.

Britain is hoping that the remaining 27 EU nations will agree to grant a transition period for Britain that lasts to the end of 2020, whereby the country remains in the frictionless and tariff-free single market and customs union to provide more clarity to businesses.

Hammond spent a large part of his address, called the Spring Statement, to laud the improvement in the government’s budget. He said public finances are at a “turning point,” noting that debt as a proportion of the country’s economy is to peak in 2018/19 at 86.5 percent of GDP.

John McDonnell, the Treasury spokesman for the opposition Labour Party, said Hammond’s “complacency today is astounding” and his statement showed “just how cut off from the real world that he is.”