The Chancellor George Osborne appears to have abandoned his target of turning the UK’s budget deficit into a surplus by 2020.
In a speech today Osborne said the UK must be “realistic about achieving a surplus by the end of the decade”, reports the BBC.
The drive to reach a surplus has been the justification for much of the Government’s austerity agenda.
But the impact of the vote to leave the EU means this is now unlikely, the Chancellor admits.
Osborne said: “As the governor [of the Bank of England] has said: the referendum is expected to produce a significant negative economic shock to our economy. How we respond will determine the impact on jobs and growth.
“We must provide fiscal credibility, continuing to be tough on the deficit while being realistic about achieving a surplus by the end of the decade. That’s exactly what our fiscal rules are designed for.”
Aegon pensions director Steven Cameron says: “Ahead of the Budget, there had been speculation that the Chancellor would seek to make savings by reducing the generosity of tax relief on pension contributions in order to balance the books.
“Without the confines of a strict target to hit, pensions may be out of the firing line. We’re in uncertain times but any future Chancellor will start their term with flexibility surrounding the budget and we’d hope for a period of pensions status quo. Any confirmation that radical reform of pensions tax relief is not on the cards would offer some welcome certainty to pension savers.”