London: Britain on Wednesday substantially hiked its funds for Brexit preparations, as it slashed growth forecasts over a five-year period in a key annual budget update.
The government will put aside another 3.0 billion pounds (USD 4.0 billion, 3.4 billion euros) ahead of its exit from the European Union, finance minister Philip Hammond told parliament.
"I stand ready to allocate further sums if and when needed," the chancellor of the Exchequer said, after Britain had already put aside 700 million pounds prior to Wednesday's additional amount.
"The negotiations on our future relationship with the EU are in a critical phase," he told lawmakers, ahead of Britain's scheduled departure in March 2019.
Hammond said the government would make progress on achieving agreement on implementing Brexit "a top priority in the weeks ahead".
At the same time, he warned that Britain's economy will grow much slower than expected over the next five years, as it faces Brexit uncertainty and weak productivity.
British gross domestic product will grow 1.5 percent this year, by 1.4 percent in 2018, 1.3 percent in both 2019 and 2020, and 1.5 percent in 2021, Hammond revealed in a raft of GDP downgrades.
Britain's Conservative government unveiled its annual budget against a backdrop of difficult Brexit negotiations with Brussels, already sluggish UK economic growth and high UK inflation that is stretching household incomes.
"Regrettably our productivity performance continues to disappoint," Hammond said.
Heading into today's announcements, Hammond was under pressure to deliver an eye-catching budget after Brexit spats with cabinet colleagues -- and following Prime Minister Theresa May's botched general election earlier this year.
Hammond meanwhile lowered the UK government's deficit forecast.
Government borrowing was expected to hit 49 billion pounds in the current fiscal year which runs through to April. That was 8.4 billion pounds lower than given previously.
"We are on track to meet our fiscal rules," Hammond noted, despite official data showing on the eve of the budget that Britain's public finances worsened unexpectedly last month.
Public sector net borrowing, the government's preferred measure of the deficit, rose to 8.0 billion pounds in October on soaring debt-interest payments.
The budget takes "a balanced approach.... Maintaining fiscal responsibility, as we at last see our debt peaking (while) continuing to invest in the skills and infrastructure that will support the jobs of the future," said Hammond.
The EU today said it would end its special budget supervision for Britain after almost a decade, saying London had reduced its excessive deficit enough to fall within the bloc's public spending rules.
"On what happens to be the day of Philip Hammond's budget, we have a good news for him -- we are closing the excessive deficit procedure for the UK," EU economic affairs commissioner Pierre Moscovici said.
