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UK ditches deficit target for more spending

Monday, October 03, 2016 - 01:42

Britain's finance minister has called for a new fiscal plan to navigate economic turbulence caused by the Brexit vote. As Ivor Bennett reports, his comments came as sterling slumped following news Britain will start divorce proceedings from the EU before the end of March.

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Some things in British politics will never change. The construction site once again the photo opp venue of choice at the Conservative Party Conference. But Theresa May and her new government are keen to show that everything else is changing. including its economic policy. SOUNDBITE (English) PHILIP HAMMOND, BRITISH FINANCE MINISTER, SAYING: "The fiscal policies that George Osborne set out were the right ones for that time. But when times change, we must change with them, so we will no longer target a surplus at the end of this parliament." Instead of setting a new target, Britain's finance minister said the deficit would be tackled in due course. His priority is more spending, on homes and infrastructure. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "I would say that for the most part, the country could do with an update in certain areas. And interest rates are low, so now would be the time to do it. But the economic evidence so far is that it's not really necessary to boost growth." Maybe not now. but the fear is next year may be too late. After Theresa May announced on sunday that the Brexit starting gun would be fired by the end of March. The party faithful were happy. Markets much less so. Sterling hitting a three month low against the dollar; a three year low against the euro. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "The worry is that really once that article 50 gets triggered, that's when companies really start to pull back on their investment plans. And that's what could start to weigh on economic growth and even usher in some sort of recession." But the slump in sterling does have its upsides. Cheaper exports helping British factory activity grow at its fastest rate in September for more than two years.

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UK ditches deficit target for more spending

Monday, October 03, 2016 - 01:42