Philip Hammond denies the goal of eliminating the British deficit

Philip Hammond denies the goal of eliminating the British deficit

Philip Hammondimage rights
PA

The British Chancellor has rejected proposals that he has abandoned a budget deficit target by the middle of the next decade.

Following his budget last week, which promised a substantial increase in spending, questions were asked about Philip Hammond's commitment to the goal.

But he told the Ministry of Finance on Monday that the target set in autumn 2016 was "not abandoned".

However, there would be a "balanced approach" to reduce the deficit.

This "balance" meant that the need for borrowing had to be weighed alongside other priorities, such as lowering taxes and increasing public spending.

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But Mr Hammond told Members that this compromise was nothing new. "I have been saying since autumn 2016 that I will take a balanced approach," he said.

This included "recognizing the need to reduce and eventually eliminate the deficit to sustainably reduce debt – which we have now achieved – but also the need to support our public services, to keep taxes low and above all invest in infrastructure and skills training, research and development and support the future productivity of our country, "he said.

"Only in this way can we achieve sustainable real income growth and a rising standard of living in the medium term."

Generous financing

The rise in Mr Hammond's budget expenditure has been described by many commentators as the 'end of austerity'.

But it also sparked discussions about whether the chancellor could balance the nation's books by the middle of the next decade.

Paul Johnson, think-tank director of the Institute for Fiscal Studies, said last week, "Any thought that there is a serious drive to eliminate the deficit by the mid-2020s is certainly true for the birds."

On Monday, Hammond said he and Prime Minister Theresa May had made it clear that ending the austerity policy was not just a loosening of the public sector.

"In our view, austerity is not just a measure of public sector spending, it also covers broader issues," he said.

"If the austerity measures come to an end, I want our public services to be more generously funded than in the fiscal consolidation period," he told the committee.

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