BEN STANSALL | AFP | Getty Images
British Chancellor of the Exchequer Philip Hammond poses for pictures with the Budget Box as he leaves 11 Downing Street in London, on November 22, 2017, before presenting the government’s annual Autumn budget to Parliament.
Finance Minister Philip Hammond delivered the U.K. government’s official Autumn Budget on Wednesday, promising to set aside £3 billion ($3.9 billion) for Brexit contingency planning.
“The negotiations on our future relationship with the European Union are in a critical phase,” Hammond said, at a time when the ruling Conservative party is facing challenging political and economic circumstances.
“We have already invested almost £700 million in Brexit preparations and today I am setting aside over the next two years another £3 billion,” he added.
Hammond had been facing mounting pressure ahead of the budget speech, with lawmakers from all sides urging him to increase spending amid austerity fatigue from the British electorate.
On Tuesday, figures from the Office of National Statistics (ONS) showed Britain’s deficit rose to £8 billion ($10.5 billion) last month — a rise of nearly 7 percent when compared to the same period a year earlier. Analysts had anticipated a figure of around £7 billion.
The widening budget deficit, which is the gap between government spending and tax receipts, pointed to a weaker picture than previously thought for the U.K.’s public finances.
Hammond has pledged to achieve a budget deficit of less than 2 percent of gross domestic product (GDP), from 2.6 percent for 2016/17, by 2020 with the goal of eliminating the deficit by the mid-2020s. However, the government could look to adopt a less hawkish tone in light of Brexit developments.
Meanwhile, a public spending splurge may also spark the attention of rating agencies. Moody’s had downgraded the U.K.’s credit rating to “Aa2” in September, citing concerns about growth and the state of public finances.
