Brexit to spark UK slowdown, blow hole in public purse

Brexit will spark an economic slowdown and ravage public finances, forcing a multi-billion-pound spike in state borrowing over the next five years, a gloomy mini-budget revealed Wednesday.

Britain is predicted to borrow an extra £122 billion ($152 billion, 143 billion euros) in the period to 2021, according to official forecasts from the Office for Budget Responsibility.

About half of that budget black hole -- or £58.7 billion -- is a direct consequence of Britain's decision to leave the European Union, according to the OBR, which blamed factors including lower migration, slower productivity growth and higher inflation.

The nation's EU exit vote will "change the course of Britain's history", finance minister Philip Hammond told parliament in the government's first budget statement since the shock referendum that was held exactly five months ago.

Brexit "makes more urgent than ever the need to tackle our economy's long-term weaknesses", the chancellor of the exchequer told MPs in his so-called Autumn Statement.

Following slightly better-than-expected growth this year, gross domestic product was expected to expand by just 1.4 percent in 2017.

That marked a drastic downgrade from the prior estimate of 2.2 percent.

"That is slower of course than we would wish, but still equivalent to the IMF's forecast for Germany, and higher than the forecast for growth in many of our European neighbours, including France and Italy," Hammond told lawmakers.

Aside from Brexit, the OBR also highlighted the effects of the government's easing of austerity measures on borrowing levels.

ING economist James Knightley said the chancellor had been handed "little room for manoeuvre".

"Hammond has delivered an autumn budget statement that highlights the damage that Brexit will likely cause," Knightley added.

In a keenly-awaited budget, Hammond unveiled a package of UK-wide investment projects, including the building of homes and road improvements.

He also raised the country's minimum wage level and hiked tax thresholds to give workers more take-home pay.

(AFP)