Opinion

Brexit looms large over Westminster budget

Chancellor Philip Hammond had to deliver a budget yesterday in circumstances that can only be described as inauspicious.

The gloomy economic outlook was perhaps the least of his worries as he tried to set out a fiscal strategy that would satisfy the arch-Brexiteers in the Conservative Party and also demonstrate to Theresa May that he deserves to keep his job.

Vicious infighting in the Tory Party has focused on the chancellor, a remain supporter whose commitment to Brexit has been put in question.

Speculation that the prime minister has lost confidence in Mr Hammond meant he was under exceptional pressure to deliver a sure-footed budget.

In the event, he produced few surprises and no fireworks but it should be acknowledged that his room for manoeuvre is limited.

The UK's fiscal watchdog, the Office for Budget Responsibility, downgraded gross domestic product forecasts for this year and the next two years.

This is not the sort of news the government wants to hear as it prepares for the exit from the European Union, a move that is already mired in uncertainty and chaos, conditions that are generally bad for business.

With hardline Brexiteers snapping at his heels, Mr Hammond put £3 billion to one side in case of no deal at the end of EU negotiations, money he presumably hopes never to have to use.

In terms of Northern Ireland, there is an extra £660 million allocated over three years, with the money to be used mainly for capital projects.

However, the decision-making process around all of this is far from clear in the absence of an executive and with civil servants distributing funds.

The announcement of consultation on a bespoke city deal for Belfast is a welcome development but it is a pity other cities, including Derry, are not being included in a scheme that can help provide a much-needed economic boost.

Of course, looming large over yesterday's budget is Brexit and the reality is that this government does not know what the future holds or what the financial position will be in March 2019 and beyond.