Hammond: Good terms will give a withdrawal bonus
BRITAIN will get a Brexit “upside dividend” if it can agree good withdrawal terms with Brussels, Philip Hammond has insisted, pointing to the prospect of more money for public spending and tax cuts.
The Chancellor made the claim as he explained how the last 10 days had seen “a measurable change in pace” in the Brexit negotiations, although many challenges remained ahead to secure a deal.
Mr Hammond is due to present a crunch Budget – the last due before the UK quits the EU next March – at the end of October.
The idea of a “Brexit dividend” has previously been floated by Theresa May, who suggested it was a way to part-fund a £20.5 billion-a-year boost to the NHS budget.
However, its validity has been questioned, including from within the Conservative Party.
Mr Hammond said: “If we are successful in negotiating that package, there will be an upside dividend in terms of the economy and, consequently, the fiscal numbers, so that’s the first bonus.
“The second bonus is that I’ve been holding a slightly larger fiscal buffer than would otherwise be necessary because of the degree of uncertainty that exists at the moment.
“As that uncertainty is unwound and we’re in more favourable circumstances, logically, one would need less of a fiscal buffer and some of that could be released to support the spending envelope or to deliver tax cuts.”
The Chancellor spoke the day after the Office for Budget Responsibility warned that the UK’S economy and public finances were likely to be weaker as a result of the Brexit vote than they would have been if the country had decided to stay in the European Union.
A discussion paper by the Government’s independent economic forecaster also indicated that a no-deal Brexit could have a “severe short-term impact” on the economy and lead to a sharp fall in asset prices.
Mr Hammond added that he had always been optimistic about a deal because it was “clearly in the interests of both sides to do so”.
He added: “What has happened over the last week, 10 days, is there has been a measurable change in pace. There is a real sense now of engagement from both sides.”
Chancellor Philip Hammond hopes a deal is close.