With tough part of Brexit ahead, UK marshals its resources

Britain's Chancellor of the Exchequer Philip Hammond poses for the media with his traditional red dispatch box outside his official residence number 11 Downing Street in London, as he departs to deliver his annual budget speech to Parliament, Wednesday, March 8, 2017. The British government's annual budget is one of the most high-profile, choreographed events in the country's political calendar and for much of the past century has taken place in the spring, but Wednesday's budget is meant to be the last to be held in the spring, with the event being pushed into the autumn. (AP Photo/Matt Dunham)
Britain's Chancellor of the Exchequer Philip Hammond poses for the media with his traditional red dispatch box outside his official residence number 11 Downing Street in London, as he departs to deliver his annual budget speech to Parliament, Wednesday, March 8, 2017. (AP Photo/Matt Dunham)
A statue of Winston Churchill in front of the Houses of Parliament in London, Wednesday, March 8, 2017. Britain's Treasury chief Philip Hammond, is set to deliver an upbeat message as he unveils a cautious budget meant to help the country bolster resources as it faces the uncertainty of leaving the European Union. (AP Photo/Matt Dunham)
Britain's Chancellor of the Exchequer, Philip Hammond, poses for photographs during final preparations for his official 2017 budget announcement, in his office at the Treasury in London Tuesday March 7, 2017. Hammond will deliver his major spring Budget Wednesday March 8, in a speech to the House of Commons which will outline the government's financial tax and spend aims for the coming months. (Carl Court/Pool via AP)
Britain's Chancellor of the Exchequer, Philip Hammond, poses for photographs during final preparations for his official 2017 budget announcement, in his office at the Treasury in London Tuesday March 7, 2017. Hammond will deliver his major spring Budget Wednesday March 8, in a speech to the House of Commons which will outline the government's financial tax and spend aims for the coming months. (Carl Court/Pool via AP)
Britain's Chancellor of the Exchequer, Philip Hammond, poses for photographs during final preparations for his official 2017 budget announcement, in his office at the Treasury in London Tuesday March 7, 2017. Hammond will deliver his major spring Budget Wednesday March 8, in a speech to the House of Commons which will outline the government's financial tax and spend aims for the coming months. (Carl Court/Pool via AP)
Britain's Chancellor of the Exchequer Philip Hammond, center, and members of the Treasury team, pose for the media with the traditional red dispatch box outside his official residence number 11 Downing Street in London, as he departs to deliver his annual budget speech to Parliament, Wednesday, March 8, 2017. The British government's annual budget is one of the most high-profile, choreographed events in the country's political calendar and for much of the past century has taken place in the spring, but Wednesday's budget is meant to be the last to be held in the spring, with the event being pushed into the autumn. (Victoria Jones/PA via AP)

LONDON — Britain plans to save money while it can to prepare for a potentially drawn-out, economically painful exit from the European Union. That's the message the Treasury chief gave Wednesday in a budget speech whose confident tone and lighthearted moments belied the dramas ahead.

Philip Hammond ditched the dry delivery that earned him the nickname "Spreadsheet Phil," as he outlined a spending plan for the 2017-18 fiscal year that he said lay the foundations for a "stronger, fairer, better Britain" outside the EU.

The chancellor told jokes — some at his own expense — setting an upbeat tone for a government ready to take on the biggest change in a generation.

"Our United Kingdom has a proud history," he told the House of Commons. "We have done remarkable things together. But we look forwards, not backwards, confident that our greatest achievements lie ahead of us."

While he promised additional funding to care for the elderly and mitigated steep rises in property taxes for some businesses, Hammond said that supporting Britain's public finances ahead of Brexit means continuing to control spending. Prime Minister Theresa May and her predecessor have presided over seven years of austerity to close a budget deficit that ballooned during the financial crisis.

"The only responsible course of action ... is to continue with our plan undeterred by any short-term fluctuations," Hammond said. "We will not saddle our children with ever-increasing debts."

The caution over spending came despite improved government finances. While the latest figures from the independent Office for Budget Responsibility show government borrowing during the 2016-17 year will probably be about 16.6 billion pounds ($20.2 billion) less than forecast, Hammond noted Britain is still 1.7 trillion pounds in debt.

The Office for Budget Responsibility also upgraded its forecast for economic growth this year, to 2 percent from the previous estimate of 1.4 percent. But it downgraded the outlook for 2018 to 1.6 percent from 1.7 percent and for 2019 to 1.7 percent from 2.1 percent.

Hammond offered a surprise 2 billion pound increase in social care funding over three years, responding to a crisis in programs for the country's aging population.

In another concession, he offered a 435 million pound package to help ease the burden on firms facing large increases in "business rates," the property taxes paid by companies. London is likely to be particularly hard hit because property values have soared since the financial crisis.

Hammond also said he would look at concerns about business rates in general, and offered some relief to the majority of local pubs — in recognition of their special place in many communities. His package included discretionary relief for difficult cases in local areas.

But the concessions came with pledges that Britain must start "living within its means." As a consequence, the Conservative Party government announced an increase in National Insurance taxes for higher-earning self-employed workers, backing down from a campaign promise not to raise the levy.

Hammond described the measure as a way to level the playing field for those employed by companies and those who work for themselves. Self-employed workers currently pay National Insurance taxes equal to 9 percent of earnings, three percentage points less than traditional employees.

This inequity is hitting the nation's coffers hard, as the number of people working in the so-called gig economy grows.

But analysts such as Ann Casey, a partner at the law firm of Taylor Wessing, suggested that equity was still a long way off.

The proposal "does not address the 'elephant in the room' that an employer has to pay employer (insurance) for an employee and there is no equivalent for self-employed individuals..," she said. "Addressing this difference would require a more radical change to the national insurance system."

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