UK finance minister Sajid Javid pledges more spending in first post-Brexit budget set for March 11

British finance minister Sajid Javid said he would take investment spending to almost double its historic average.
British finance minister Sajid Javid said he would take investment spending to almost double its historic average.PHOTO: REUTERS

LONDON (REUTERS) - British finance minister Sajid Javid will deliver the government's first post-Brexit budget on March 11, promising more investment to help voters who gave Prime Minister Boris Johnson a sweeping election win last month.

During the campaign, Javid said he would take investment spending to almost double its historic average as he sought to show voters that a decade of tight budget controls was ending.

"People across the country have told us that they want change. We've listened and will now deliver," Javid said in a statement on Tuesday (Jan 7), promising "a decade of renewal" and a levelling up of opportunity around the country.

Johnson won a big majority in Parliament, paving the way for Britain to leave the European Union on Jan 31. In the hours after his victory, Johnson said he would not disappoint voters who had switched to the Conservatives in traditionally Labour-supporting areas of northern and central England.

The finance ministry said Javid would use low borrowing costs to boost investment, helping the Conservatives meet its campaign promises of up to 20 billion pounds (S$35.5 billion) a year in extra investment in road, rail and other infrastructure.

The budget would also prioritise the environment, it said.

Britain has some room for manoeuvre on spending having slashed the budget deficit from 10 per cent of gross domestic product in 2010 to about 2 per cent now.

Javid announced in September the biggest increase in day-to-day spending in 15 years with a focus on hospitals, police and vocational training.

However, he has committed not to borrow over the long term to fund this so-called current spending which will fall far short of a full reversal of past cuts, despite Johnson offering the prospect of an end to austerity.

 
 
 
 

The Institute for Fiscal Studies (IFS), an independent think tank, said in November that the Conservatives' election proposals would leave public spending, excluding health, 14 per cent lower in inflation-adjusted terms by 2024 than in 2010.

The IFS also said borrowing could rise sharply if Britain fails to secure a new trade deal with the EU by the end of 2020, when a no-change transition period is due to end, potentially delivering a shock to the world's fifth-biggest economy.

Labour's top finance official John McDonnell said he had no confidence that the government would deliver the scale of investment needed, and the lack of focus on the threat of climate change was "criminally irresponsible."