Ham­mond: Good terms will give a with­drawal bonus

The Herald - - POLITICS - MICHAEL SET­TLE

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.

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