LONDON (Reuters) – British finance minister Jeremy Hunt said on Monday that he hoped in future to reverse the decline in public investment which is forecast in the government’s latest budget plans.
“I don’t think you want declining public investment. And I very much hope we’ll be able to get back into a place where we don’t have to do that,” Hunt said at an event hosted by the Resolution Foundation think tank.
In government budget forecasts published last month, British public sector net investment is forecast to fall steadily from 2.6% of gross domestic product in the current financial year to 1.8% in the 2028/29 financial year.
The Resolution Foundation, a think tank focused on living standards for low- and middle-earners, blamed weak investment for much of Britain’s weak productivity growth since the global financial crisis in 2008, in a report released on Monday.
Hunt said his decision last year to freeze the level of capital spending in cash terms came after the government had previously raised its annual capital budget to around 100 billion pounds ($127 billion) from 70 billion pounds.
“It was an incredibly difficult situation. But it was necessary for the markets and it was necessary for the battle against inflation,” he said.
“I hope as soon as we can afford to we can get back to real-terms growth,” he added.
Opposition leader Keir Starmer – whose Labour Party has a 20-point lead over the Conservatives in opinion polls, ahead of an election expected next year – is set to say at the same event that Labour will be unable to “quickly turn on the spending taps” if it wins power.
($1 = 0.7890 pounds)
(Reporting by David Milliken; Editing by Kate Holton)
