Philip Hammond told to perform "urgent" spending review

Philip Hammond told to perform

Philip Hammond told to perform "urgent" spending review

Chancellor of the Exchequer Philip Hammond (picture) issued a fresh warning that leaving the European Union (EU) without a deal would damage the United Kingdom economy and leave people less well off.

The Bank has also slashed this year's growth forecast to 1.2% - the lowest since 2009, when the economy contracted by 4.2% at the height of the recession following the financial crisis.

He warned: "Leaving with no deal would mean significant disruption in the short and medium-term and a smaller, less prosperous economy in the long-term, than if we leave with a deal".

But this depends on a Brexit deal being completed in the next few weeks and the "uncertainty that is hanging over our economy lifted".

The growth prediction for 2020 was kept at 1.4%, and the OBR sees an acceleration in the following year. "Higher unemployment, lower wages, higher prices in shops: that is not what the British people voted for in June 2016".

British Prime Minister Theresa May stressed on Tuesday that parliament's approval of the withdrawal agreement she has reached with Brussels will deliver a fiscal "Brexit dividend".

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And, in many respects, the word "if" was the most significant of all in a setpiece speech which warned of significant repercussions if there is a no-deal Brexit. Hammond nevertheless reaffirmed the government's commitment to provide the country with a "deal dividend".

He said Britain's public debt was set to fall sustainably "for the first time in a generation". "The idea that some readily available fix to avoid the consequences of a no-deal Brexit is just wrong".

Hammond said he announced in the Autumn Budget that the "long but necessary squeeze on current public spending would come to and end at the upcoming Spending Review".

"While in theory this should give the Chancellor greater wriggle room, he was at pains to point out that the purse strings won't be loosened until there is greater clarity around the UK's future relationship with the EU".

He added: "There's plenty that needs fixing and there are ways of raising more revenue, but they need to be carefully thought out and implemented if they are to be both effective and fair".

The CBI's chief economist, Rain Newton-Smith, said it was an "admirable attempt to set out a long-term vision for the United Kingdom economy" against a hugely uncertain political backdrop.

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