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Chancellor insists Brexit deal will help economy and reveals Londonderry talks 'progressing'

16 March 2019

"Leaving with no deal would mean significant disruption in the short and medium term and a smaller, less prosperous economy in the long term, than if we leave with a deal", he said.

The Bank has also slashed this year's growth forecast to 1.2% - the lowest since 2009, when the economy contracted by 4.2% at the height of the recession following the financial crisis. A chaotic exit that would throw his forecasts into disarray.

Delivering his spring statement after MPs emphatically rejected Theresa May's Brexit deal for a second time on Tuesday night, the chancellor said the issue was "damaging our standing and reputation in the world". "This is yet another reason why we can not afford a "no-deal" Brexit scenario and why Parliament must take concrete action tonight and in the coming days to avoid that situation".

In Hammond's speech yesterday, the Treasury's official view on a "disorderly Brexit" were also made clear, during which Hammond said it had the potential to become "a significant blow" to the United Kingdom economy.

"We estimate (treating loans partly as grants) could increase the structural budget deficit by around 12 billion pounds or 0.5 percent of gross domestic product in 2020-21", the OBR said.

Britain faces its first fall in house prices since 2012, the Office for Budget Responsibility has said.

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Lawmakers are expected to rule out a no-deal departure - a scenario the PM herself accepts would "damage" the United Kingdom - in a vote later yesterday. Any other outcome will have significant implications for the economy, tax receipts and the amount of money Hammond has to allocate to departments in his Spending Review this year.

Britain will avoid imposing tariffs on most imported goods in the event of a no-deal Brexit, though officials said prices of key European Union products including beef, cheese and cars will rise.

He remarked: "By once again declining to set totals for the forthcoming spending review, [the chancellor] deferred making some of the biggest non-Brexit decisions of the parliament".

The Chancellor said there was "good news" on the public finances, with borrowing forecast to reach £13.5bn in 2023/24, its lowest level in 22 years.

Borrowing will fall from £29.3 billion (RM157.85 billion) in 2019-20, compared to a forecast of £31.8 billion in October.

"In recent weeks survey indicators of current activity have weakened materially, in part reflecting heightened uncertainty related to Brexit", the OBR said. "That is not what the British people voted for in June 2016".

Chancellor insists Brexit deal will help economy and reveals Londonderry talks 'progressing'