A reassuring Budget to calm Brexit nerves
HE Chancellor has displayed a willingness to assure businesses of the benefits to be won from a smoothly orchestrated escape from the EU red-tape factory. Whitehall sources also say he has proved himself to be a champion of business within the Cabinet, reining back some of Mrs May’s ideas for a meddling industrial strategy and putting workers on company boards. He has moved from being a brake on Brexit to becoming a firm advocate of a business-friendly departure from the EU.
At the same time Mr Davis has impressed Cabinet colleagues by avoiding the polarising language of a divide between “hard” and “soft” Brexit.
He has also taken a pragmatic, long-term stance on the prospects for reducing migration of EU citizens to defuse business worries about sudden labour shortages. Both ministers appear determined to press on with the EU exit while listening to the concerns of former Remainers.
Wednesday’s Budget will be crafted to reassure business ahead of the historic moment scheduled later this month when Mrs May is due to activate Article 50 which formally begins the negotiation process. Tory MPs are not expecting a gimmick-laden package like the Budgets seen during George Osborne’s time at the Treasury. It is also likely to be a particularly slimmed-down bundle given that another Budget is due in the autumn as part of his decision to scrap the two annual financial statements cycle introduced by Gordon Brown.
MR Hammond’s biggest challenge is to find a few hundred million to reduce the financial pain to some firms from the overhaul of business rates and stave off a crisis in the adult social care system. Beyond those twin objectives his task will be to signal that the waters are calm as HMS Great Britain prepares to navigate through the Article 50 rocks. The Chancellor will be helped by having £12billion more in Treasury coffers than he anticipated in his Autumn Statement thanks to a healthy burst of economic growth that he did not foresee.
Some Tory MPs would like to see a substantial share of that sum go towards tax cuts as a herald of the sort of dynamic, low-tax economy they want Brexit to bring. “We should be reducing the tax burden to show the world we are ready for their business,” one backbencher told me.
Wary of the Treasury’s still stratospheric deficit Mr Hammond will resist the calls for wide-ranging tax cuts. The Chancellor can afford to disappoint some of his Tory critics so long as his Budget does smooth the way towards the EU exit door.