Prime Minster Theresa May has put back the deadline for balancing the UK’s finances to 2025.
In the Conservative manifesto, which launched today, May pledges to balance the budget by the middle of the next decade. While Chancellor of the Exchequer Philip Hammond had not set a date for when the deficit would be reduced to zero, last autumn he promised to “return the public finances to balance at the earliest possible date in the next Parliament”, which would have begun in 2020.
The last time that public sector net borrowing was in surplus was in 2000/01 according to the OBR public finances databank, which would mean that public sector net borrowing would have been in deficit for 25 consecutive years by the time the new deadline is reached.
The Centre for Policy Studies head of economic research Daniel Mahoney says: “While it is quite understandable that Theresa May wants fiscal wriggle room during the Brexit negotiations, this fiscal target is disappointing. It should be seen as a ‘worst case’ scenario. The next government must aim to achieve a budget surplus at an earlier date.”
May also reiterated the pledge to increase the personal tax allowance, raising it to £12,500. The higher tax rate threshold would increase to £50,000 by 2020 and corporation tax would be cut to 17 per cent by 2020, while a full review of business rates would be launched.
Plans to scrap the state pension triple lock after 2020 were also confirmed while there would be no changes to VAT.
On negotiating the UK’s exit from the EU, May said: “If we get Brexit right we can use this moment of change”, but warned that “if we fail the consequences for Britain…will be dire. If we succeed the opportunities ahead of us will be great.”
“Every vote for me and my team will strengthen my hand in the negotiations to come. Every vote for me and my team will be a vote for a stronger more prosperous Britain,” May said.
The Prime Minster predicts the next five years will be “among the most challenging in our lifetime”, listing the “five great, giant challenges that we face as a country” as: the need for a strong economy; responding to Brexit and a changing world; tackling enduring social divisions; responding to an ageing society and facing up to fast-changing technology.
May also highlighted plans to tighten rules on takeovers and company pay and make it mandatory for companies to publish pay ratios on executive pay.