Britain finance minister Philip Hammond delivers 'gloomy' budget

Britain's Chancellor of the Exchequer Philip Hammond holds up the traditional red dispatch box, outside his official residence 11 Downing Street, before delivering the Budget. Photo / AP

British finance minister Philip Hammond has delivered a gloomy budget, slashing growth forecasts for the Brexit-bound economy.

The outlook on Wednesday gave Hammond little room for the bold moves that many in his Conservative Party - still smarting from an election mauling in June - are demanding to help households after years of cuts in public spending.

Hammond said he was taking a balanced approach to steering Britain's economy through the next few years when it will face the challenge of leaving the European Union.

Acknowledging high inflation and weak wage growth, Hammond pointed to forecasts that unemployment will continue to fall.

Hammond said Britain's budget forecasters now expect gross domestic product will grow by 1.5 per cent in 2017, compared with a forecast of 2 per cent made in March, reflecting a slowdown this year as last year's Brexit vote weighed on the economy.

The Office for Budget Responsibility saw growth in 2018 at 1.4 per cent, lower than its previous forecast of 1.6 per cent, Hammond told parliament.

The revisions for later years were more acute - GDP growth forecasts in 2019 and 2020 stood at 1.3 per cent in both years compared with 1.7 and 1.9 per cent respectively seen in March.

The OBR had been expected to take a gloomier view on the economy after it said in October that it would lower its projections for productivity growth in the years ahead.

By 2021 and 2022, growth was seen picking up only slightly to 1.5 and 1.6 per cent respectively.

Britain is expected to run a budget deficit of 1.3 per cent of GDP by the 2021/22 financial year, almost double the previous estimate of 0.7 per cent.

Before last year's Brexit vote, Britain had been aiming to post a budget surplus by the end of this decade.