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Chancellor of the Exchequer, Philip Hammond, presents the red Budget Box as he departs 11 Downing Street to deliver his 2018 budget announcement to Parliament on October 29, 2018 in London, England.

The U.K. Finance Minister Philip Hammond announced that the country is coming to the end of an era of austerity.

Hammond was speaking in front of lawmakers at the government’s U.K. budget announcement, which is an annual statement about what taxes it plans to impose, as well as what it plans to spend public money on. It also provides an update on the state on the nation’s finances.

Hammond started his speech in Parliament Monday by saying he has a budget “for hard working families, the strivers, the grafters and the carers,” before claiming “the era of austerity is coming to an end.” It is the last U.K. budget to be announced before Britain departs the European Union on March 29, 2019.

The forecast for output growth in the U.K. (the change in gross domestic product) was also revised upwards by the Office for Budget Responsibility. The growth forecasts have now been increased to 1.6 percent in 2019, from a previous estimate of 1.3 percent in March. Hammond also revealed that forecasts for 2020 and 2021 are now higher at 1.4 percent, with 1.5 percent in 2022 and 1.6 percent in 2023.

“Taking into account all announcements since the Spring Statement, including measures I shall announce today, shows the deficit down from almost 10 percent under Labour (the opposition party) to less than 1.4 percent (of GDP) next year under this Conservative government and falling to just 0.8 percent by 2023-24,” Hammond added.

Hammond also claimed that borrowing this year is to be £11.65 billion ($15 billion) lower than forecasts in his spring update.

In 2016-17, net borrowing in the U.K. was £39.4 billion and the total U.K. public sector net debt was £1,792.3 billion, equivalent to 85.2 percent of GDP.

Spending plans

After the claims of an improving economy, the U.K. finance minister outlined where he would allocate more funding.

Hammond increased the amount of cash to help the U.K. government prepare for Brexit by £500,000 for 2019-2020, taking the total figure to $2 billion.

To support business, Hammond raised the annual investment allowance, a tax incentive to encourage capital investment, to £1 million from the current level of £200,000. The lawmaker also announced an additional £1 billion to go to the Ministry of Defence to boost cyber capabilities as well as anti-submarine warfare capacity.

Other commitments include £160 million for counter terrorism, £420 million to tackle potholes, and £400 million for spending on schools.


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