The UK will borrow an extra £23bn over the next five years to pay for a string of infrastructure projects, the chancellor announced in the Autumn Statement on Wednesday 23 November.
Philip Hammond, the chancellor, said the money will create a National Productivity Investment Fund that will include:
- £2.3bn for infrastructure to accompany new houses
- £1.1bn on transport networks
- £1bn in digital infrastructure spending
- £390m to develop future transport technology
He also referred to the £2bn funding increase for science and technology research and developed, announced by the prime minister Theresa May on Monday.
“We have chosen to borrow to kick-start a transformation in infrastructure and innovation investment,” the chancellor said.
Announcing the Office for Budget Responsibility’s (OBR) forecast, Hammond said potential economic growth after the referendum was predicted to be 2.4% points lower than if Remain had won.
The OBR, the UK’s statutory fiscal watchdog, also predicted growth would be 2.1% in 2016, slowing to 1.4% in 2017 because of lower investment due to greater uncertainty, and weaker consumer spending due to inflation caused by the devaluation of the pound.
It predicted growth would recover to 1.7% in 2018, 2.1% in 2019 and 2020 and 2% in 2021.
Talking about the National Productivity Investment Fund, Hammond said a reliable transport networks was essential for growth and productivity.
“This Autumn Statement commits significant additional funding to help keep Britain moving, and to invest in the transport networks and vehicles of the future,” he said.
The £1.1bn on transport includes £220m to address “traffic pinch points”, £450m on piloting digital signalling on railways, and £390m on low-emission vehicles.
The chancellor also said he would fund the development of connected and self driving cars and the installation of charging points for electric vehicles.
Hammond also announced £1bn to develop a “world class digital infrastructure” including a fully fibre-optic network, and said he wanted the UK to be a “world leader” in 5G wireless internet technology. The investment would “catalyse private investment” in fibre networks, he said.
He announced relief on business rates of 100% for five years on new fibre infrastructure and said he hoped the incentives would help more businesses gain access to fibre internet.
“Our future transport, business and lifestyle needs will require world class digital infrastructure to underpin them,” he said.
The chancellor said he is no longer seeking to deliver a surplus in 2019-20 and is reportedly borrowing £122bn more than he had had forecast in March.
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