U.K. to Invest $1.2B in Broadband as Economic Growth Forecast Falls Amid Brexit

UK Houses of Parliament - H 2015
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UK Houses of Parliament - H 2015

Finance minister Philip Hammond in his first budget speech, and the first since the Brexit vote, outlines some new plans.

The British government said Wednesday that it plans to improve its broadband and broader digital infrastructure with a big multiyear investment.

Philip Hammond, Britain's chancellor of the exchequer, the U.K. equivalent of other countries' treasury secretary or finance minister, gave his fall budget statement in front of the parliament's House of Commons. It was his first budget speech, and the first since the Brexit vote. The minister typically uses the fall update to discuss the state of the economy and outline the government's spending plans.

As had been expected in recent days, Hammond, among other things, announced the government would invest more than $1.24 billion (£1 billion) by fiscal year 2020-2021 in "digital infrastructure," designed to increase broadband speeds and availability. Under his plan, 2 million additional households could get access to full-fiber broadband. 

"This will bring faster and more reliable broadband for homes and businesses across the U.K., boost the next generation of mobile connectivity and keep the U.K. in the forefront of the development of the Internet of Things," the autumn statement said. The news comes amid rising online, including mobile, video usage.

The plan includes the injection of $495 million (£400 million) into a new digital infrastructure fund, to be matched by emerging providers, to support technology firms.

Andrew Griffith, COO of pan-European pay TV giant Sky, in which 21st Century Fox owns a 39 percent stake, said ahead of the autumn statement: "We welcome the government's announcement on broadband investment…Government has played its part through this package of measures, which should help kick start the investment needed to push the U.K. up the league table." 

Highlighting increased uncertainty following the Brexit referendum, Hammond said the government has lowered its 2017 economic growth forecast from 2.2 percent to 1.4 percent, while the current year's forecast was slightly raised from 2.0 percent to 2.1 percent.

U.K. TV giant ITV recently said that it would lay off around 120 people as part of cost cuts announced in July due to the "wider economic uncertainty" following the Brexit vote.

Hammond also said that the U.K. will not reach its target of a budget surplus in 2020-2021, instead eyeing a $26.0 billion (£21 billion) deficit amid the weaker economic growth, lower-than-earlier-expected tax revenue and new spending plans.

He also said that Britain would need to borrow an additional $151 billion (£122 billion) over six years due to the Brexit-related uncertainty. Media spoke of a "black hole" created by the late June vote in favor of Britain's exit from the European Union.