Philip Hammond faces public finances ‘bloodbath’ amid warnings of slower growth
The Chancellor’s £26bn Budget war chest could be all but wiped out, as the Office for Budget Responsibilty prepares to downgrade growth forecasts.
Officials are warning that Philip Hammond could be facing a public finances “bloodbath” ahead of the Autumn Budget.
Mr Hammond had sought to give himself some wriggle room as the UK entered uncertain Brexit negotiations and was expecting to have around £26bn to play with.
However, the latest growth forecasts from the Government’s fiscal watchdog would see the figure slashed by two-thirds.
In a report set to be published on Tuesday the Office for Budget Responsibility will downgrade the UK’s growth projections, putting pressure on the Chancellor to rethink any planned spending commitments.
According to Treasury analysis the OBR’s revisions would wipe out two-thirds of the £26bn Mr Hammond set aside last year to deal with Brexit risks.
The Government has come under fire in recent months over the public sector pay cap – which limits annual salary increases to 1% - and has hinted that it could be removed across the board after police and prison officers were given a pay rise.
Mr Hammond will deliver his Autumn Budget on November 22.