U.K. Chancellor To Focus On Infrastructure Spending

Britain's Chancellor of the Exchequer Philip Hammond is set to prioritize infrastructure spending in his first Autumn Statement to be published on November 23. The statement will also be the first announcement on future budget plans from the government since the U.K. voted to leave the EU in the referendum held late June.

Markets await to see whether Hammond unveils fiscal expansion to make good the loss caused by the 'Brexit' decision.

The chancellor is expected to provide more funds to boost broadband speed and raise infrastructure spending to attract more businesses. He is also likely to lower corporate tax from the current 17 percent.

The European Union as well as the U.K. currently face uncertainty as 'Brexit' negotiations are set to begin next year.

In an interview on the BBC's "Andrew Marr Show", Hammond said forecasts of slowing economic growth poses a "sharp challenge" for the public finances. He said the debt level was still "eye-wateringly" large.

As Hammond has stressed that the economy is likely to face difficult times ahead, IHS Global Insight economist Howard Archer expects the government to provide some support now and to build-in scope for increased fiscal support over the lifetime of this parliament if need be.

It looks likely that he will at least build some flexibility into the fiscal framework so he has scope to react if the economy suffers a major relapse, Archer noted.

Hammond had earlier suggested that he will prioritize infrastructure spending to support the economy.

The British Chambers of Commerce has urged the Chancellor to support firms looking to recruit and invest in workforce, including measures to boost investment and lower upfront business costs.

The Federation of Small Businesses called for more infrastructure spending and reassurance from the chancellor that there is no change in the government's commitment to permanently increase small business rate relief and that no additional tax burdens will be introduced.

The FSB said small firms currently rely on EU-funded local infrastructure and business support. The lobby requested the chancellor to provide clarity on schemes that address the needs of UK small businesses when the nation finally exit the EU.

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