Hammond has confirmed it – we have an economic muddle, not a model

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The chancellor widely briefed that this statement would not move the earth. And it delivered: it was not a “ fiscal event ” – but it should have been. Urgent action is required in three areas: clamping down on corporation tax avoidance; addressing the crisis in public services; and long-term reforms to make the economy fairer and more sustainable.

In the week when it was revealed that tax paid by multinationals has been in consistent decline, the case for reforms to corporation tax are overwhelming and urgent. Our proposal at the Institute for Public Policy Research for an “ alternative minimum corporation tax ” for multinational companies – based on UK revenues and global profitability, and triggered by five years of low reported profits – would tackle avoidance and ensure a level playing field with the vast majority of responsible businesses that pay the taxes they owe. But cancelling the further planned cut to corporation tax was the very least the chancellor could have done.

The UK economy remains precarious. A poor Brexit deal could hit demand from the rest of the world

“Judge me by my record, Mr Speaker,” declared the chancellor, referring to the funding of public services. Yet in the past decade, social care funding has fallen in real terms, while demand has risen. As a result, 26% fewer people are now receiving the care they need. And the NHS has experienced the most austere decade in its history. The result is plain to see: rising waiting times and the lowest level of public satisfaction since the early 1980s.

The upward revisions in productivity and growth figures must have come as a relief for Hammond. As expected, he attributed the improvements to the government’s economic policy. But what economic policy? Further reductions in demand as a result of continuing austerity? An industrial strategy that’s yet to be implemented? An apprenticeship levy that has led to falling numbers of apprenticeships? Infrastructure investments that are yet to materialise?

Through benefit and tax credit cuts, austerity has shifted the deficit from government to households; levels of household indebtedness are close to the pre-crisis peak. And with continuing real-terms cuts in expenditure across departments, together with an additional £2.5bn of benefit cuts, austerity is set to continue to force households to choose between debt or declining living standards.

So, the UK economy remains precarious. A poor Brexit deal could hit demand from the rest of the world: the EU is both a large market in itself, and Britain accesses global trading opportunities through its trade agreements with 50 other countries. Households are struggling to sustain their living standards – and are increasingly reliant on credit to do so – leaving them vulnerable to any downturn or increase in interest rates. Public services – especially local government and the NHS – are on the brink, with a fundamental mismatch between need and resources. There were no substantive answers to any of these immediate challenges.

Related: Spring statement 2018: the chancellor's key points at a glance

The UK economy is in need of fundamental reform. We have an economic muddle rather than an economic model: the UK is home to some of the most productive firms in the world, and yet overall productivity is far behind comparable countries; we have the world’s top financial centre in the City of London, but lower investment than in competitor economies; our success in exporting services is dwarfed by our deficit in the trade in goods; and despite our reliance on vital public services the government is unwilling to raise the taxes required to pay for them.

The immediate and the long-term challenges facing the UK economy are substantial; the case for serious reform overwhelming. Yet to the big questions of the day, the chancellor arrived with neither an analysis nor a plan.

• Tom Kibasi is director of the Institute for Public Policy Research and chair of the IPPR Commission on Economic Justice

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