- Title: UK budget plan welcomed by builders, but borrowing levels surprise economists
- Date: 23rd November 2016
- Summary: LONDON, ENGLAND, UK (NOVEMBER 23, 2016) (REUTERS) VARIOUS OF BUILDERS WORKING ON A NEW BUILD HOUSE (SOUNDBITE) (English) FEDERATION OF MASTER BUILDERS, DIRECTOR OF EXTERNAL AFFAIRS, SARAH MCMONAGLE, SAYING: 'We're pleased that the Chancellor seems keen on the idea of borrowing to build and perhaps moving away from the time line that they place on themselves under the previous administration to pay down the deficit by the end of this parliament so that's really positive for construction because for every 1 pound invested in construction in the UK, 2.84 pounds is generated in the wider economy so it really is worthy of investing and spending on." VARIOUS OF BUILDERS WORKING ON A NEW BUILD HOUSE (SOUNDBITE) (English) FEDERATION OF MASTER BUILDERS, DIRECTOR OF EXTERNAL AFFAIRS, SARAH MCMONAGLE, SAYING: "It (access to funding) has been a huge problem in our industry. For the last few years it was the number one barrier to SMEs building homes. And that's really been the case since the economic downturn in 2007 and 2008. The government has intervened where it should. The banks just looked at our industry as being too risky full stop. One day they were lending willy-nilly to anyone who wanted it and then the next day when the economic downturn came upon us they went too far the other way and it was almost a blanket no." ANGLE GRINDER CUTTING THROUGH METAL BAR BUILDER USING TOOL (SOUNDBITE) (English) HEAD OF ECONOMICS, LLOYDS BANK COMMERCIAL BANKING, ADAM CHESTER, SAYING: "The headline for me as an economist is the net borrowing figures. The cumulative increase in public sector of the net borrowing, the budget deficit number, 122 billion pounds over the next five years. Of course they have been widely trailed in the press over the past few days, people talking about the 100 billion pounds increase in borrowing, so it has come a little bit above that." VARIOUS BUILDING ACTIVITY ON SITE WORKMAN SANDING BUILDING MATERIAL (SOUNDBITE) (English) FEDERATION OF MASTER BUILDERS, DIRECTOR OF EXTERNAL AFFAIRS, SARAH MCMONAGLE, SAYING: "The wages in the industry are fantastic at the moment. Bricklayers in London can be earning 60,000 pounds a year. Carpenters and joiners can be earning 50,000 pounds a year so, you know, the salaries are fantastic." VARIOUS BUILDING ACTIVITY ON SITE WORKMAN LOOKING AT PLANS SAFETY NOTICE AT BUILDING SITE FENCE AROUND BUILDING SITE
- Embargoed: 8th December 2016 16:49
- Keywords: Budget Autumn Statement analyst building housing industry
- Location: LONDON, ENGLAND, UK
- City: LONDON, ENGLAND, UK
- Country: United Kingdom
- Topics: Economic Events
- Reuters ID: LVA00159NZVD9
- Aspect Ratio: 16:9
- Story Text: Britain's finance minister freed up an extra 23 billion pounds ($28.6 billion) on Wednesday (November 23) to invest in rail, telecoms and housing infrastructure over the next five years to help boost the country's output.
The National Productivity Investment Fund will be spent on infrastructure and research and development including on science and technology, Finance Minister Philip Hammond said in his first autumn budget statement to parliament.
After greenlighting multi-billion-pound projects to expand Heathrow airport and build a new nuclear reactor at Hinkley Point, Hammond's statement contained a series of relatively modest proposals, although he said more was on the way.
He said the government would invest between 1 and 1.2 percent of GDP on economic infrastructure from 2020, compared with 0.8 percent currently, and had asked the National Infrastructure Commission to advise on future projects.
In March, the government's National Infrastructure Delivery Plan 2016-2021 had flagged a pipeline of projects worth some 483 billion pounds across a range of sectors that need to be delivered.
The effect of unaffordable housing on Britain's productivity makes building more houses an urgent priority, Hammond said, flagging up plans for a 2.3 billion Housing Infrastructure Fund, to help unlock land for housing.
A further 1.4 billion pounds will be released for affordable housing, while housing providers will be allowed to build a wider variety of housing types, Hammond said.
The government will also spend 1.1 billion pounds on local transport networks in England, 450 million pounds to trial digital signalling on the railways and money to help boost uptake of electric vehicle infrastructure, Hammond said.
A further 1 billion pounds will be spent on upgrading the digital infrastructure, including in 5G technology, and Hammond also confirmed a plan to spend an extra 2 billion pounds on R&D by 2021, announced by Prime Minister Theresa May on Monday.
The announcements were welcomed by representatives of the UK building industry.
'We're pleased that the chancellor seems keen on the idea of borrowing to build and perhaps moving away from the time line that they place on themselves under the previous administration to pay down the deficit by the end of this parliament so that's really positive for construction because for every 1 pound invested in construction in the UK, 2.84 pounds is generated in the wider economy so it really is worthy of investing and spending on," said the Federation Of Master Builders' Director Of External Affairs, Sarah Mcmonagle.
In the country's first budget plan since voters decided to leave the European Union, Britain ramped up its borrowing forecasts as the economy slows in the wake of the Brexit vote.
Britain will need to borrow 122 billion pounds more over the next five years than it expected before voters decided to leave the EU in June, Hammond said. The net public sector debt is forecast to hit a peak of 90.2 percent of economic output in 2017/18, he said.
The Office for Budget Responsibility, Britain's independent budget forecasters, said gross domestic product would grow by 1.4 percent in 2017, down from an estimate of 2.2 percent made in March, before voters decided to leave the EU.
"The headline for me as an economist is the net borrowing figures. The cumulative increase in public sector of the net borrowing, the budget deficit number, 122 billion pounds over the next five years. Of course they have been widely trailed in the press over the past few days, people talking about the 100 billion pounds increase in borrowing, so it has come a little bit above that," said Lloyds Bank Commercial Banking Head Of Economics, Adam Chester.
Hammond said the OBR believes uncertainty about Britain's trading relationships with its EU neighbours - who buy nearly half the country's exports - will cut growth by 2.4 percentage points over coming years. - Copyright Holder: REUTERS
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