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‘Steady-as-she-goes’ budget planned ahead of Brexit

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The chancellor has ruled out major tax rises in next week’s budget, thanks to a last-minute influx of tax revenues which have bolstered his balance sheet.

According to Whitehall sources, the budget deficit is due to be significantly smaller than expected this year thanks to higher income tax and VAT revenues in recent months.

The upshot is that Philip Hammond will be able to promise to end austerity and still reach his target of eliminating the deficit by the middle of the next decade – without any major tax rises.

The news will come as a relief both inside and outside government, since some had speculated that the chancellor would fail to be able to pass his budget through parliament if it contained controversial new tax raising measures.

Brexit stock photo
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The chancellor’s focus is not radical economic reform but economic stability.

However, some will ask why Mr Hammond is not using his single annual budget to make more radical changes to the UK economy.

The sources said to expect a “steady-as-she-goes” budget, underlining the preparedness of the UK economy for Brexit.

There would be further detail on what kind of economic dividend the UK could expect if the prime minister’s Brexit proposal – the so-called Chequers deal – goes ahead.

And while the chancellor is not planning to increase the size of the Brexit war chest – currently £3bn – there will be further disbursements in the coming months.

Philip Hammond delivers his budget speech
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Watch live coverage of the budget on Sky News at 3.30pm on Monday

There will be more detail on plans to introduce taxes on tech giants and to help small businesses.

But this budget is unlikely to be remembered in years to come as a grand, visionary affair.

Even so, it will point out that the economic news at present is getting better.

While the economy is hardly booming, productivity is improving, the jobless rate remains at the lowest level since the mid-1970s and real wages are rising, albeit gradually.

It is possible to cast the economic picture in a relatively positive light.

Indeed, productivity has outperformed the estimates produced by the Office for Budget Responsibility last year.

However, there are growing economic problems brewing around the country.

Plans to move more people on to Universal Credit could spark a huge increase in the number of people using foodbanks, the Government is being warned
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There is disquiet about the implementation of Universal Credit

As London continues to thrive economically, many towns still feel like they have been left behind.

In Dudley, in the West Midlands, there has been a dramatic increase in homelessness.

There is genuine disquiet about the implementation of Universal Credit.

In short, there are many who feel that what is needed now is not a do nothing Budget but a dramatic shift of the economic balance.

However, the chancellor reasons that what should take priority right now is not radical economic reform but economic stability.

:: Watch live coverage of the budget on Sky News at 3.30pm on Monday

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