The chancellor boasts of good news, but the Brexit effect is plain to see

PHILIP HAMMOND, the chancellor, is doing what he can to shake his dull-as-ditchwater reputation. As is his wont at fiscal events, he peppered his Spring Statement, an update on the economy delivered to Parliament on March 13th, with wisecracks. “Mr Speaker,” he said, waving his finger at the Labour front bench, “if there are any Eeyores in the chamber, they are over there. I, meanwhile, am at my most positively Tigger-like today.” Labour’s numbers, he said, were the product of a “briefing from Russia Today.”

It is easy to see why Mr Hammond was in a good mood. The Office for Budget Responsibility (OBR), the government’s fiscal watchdog, gave him improved economic forecasts. The OBR expects public borrowing over the next four years to be £145bn ($200bn), £12bn less than was predicted last November. Britain’s ratio of public debt to GDP is now expected to be lower next year than it was in 2016. Falling public debt represents “a turning-point in the nation’s recovery from the financial crisis of a decade ago,” Mr Hammond boasted.

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Britain’s public finances are indeed looking better, for a number of reasons. Since becoming chancellor in July 2016 Mr Hammond has resisted growing calls, including from within his own Tory party, to ramp up spending on things like local government and welfare. Tax revenues are also healthier.

Since the Brexit vote in June 2016 the economy has performed better than most forecasters expected. The OBR once predicted GDP growth of 1.4% in 2017, but it now sees growth of 1.7%. Britain’s four biggest taxes—income tax, national insurance, value-added tax and corporation tax—make up two-thirds of total receipts. All are returning revenues…

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