£60BILLION BREXIT BOMBSHELL
Hammond’s war chest to cover cost of leaving the EU
TORY chancellor Philip Hammond has to set aside a £60billion cash pot from the budget to pay for the UK’s access to Europe after Brexit.
He ruled out extra spending on the NHS or the social services crisis in England yesterday as he prepared to build up a warchest against the “unexpected challenges” of leaving the EU.
Hammond said he would keep “reserves in the tank” to see the economy through its looming Brexit challenge.
That signals there is little room for extra spending in Wednesday’s budget despite better news on borrowing.
His budget will be overshadowed by the triggering of the two-year Brexit process, which is expected this month.
The SNP warned the budget will be the full “Brexit bombshell” and Labour called on increased tax receipts to be used to boost the minimum wage.
In the Autumn Statement, Hammond set out plans to set aside £27billion to give him “headroom” in the event of a future downturn.
Higher than expected growth forecasts and lower borrowing mean that figure is set to more than double to almost £60billion.
Hammond said: “If someone gives you a bit more headroom on your credit card, it doesn’t mean you need to spend it all at once.”
He also warned the EU that Britain will “fight back” and not “slink off like a wounded animal” if it does not get the deal it wants.
In some of the toughest talking yet ahead of the UK triggering Article 50, he said Britain would “do whatever we need to do” to be competitive in the event of leaving the EU without a trade agreement. Hammond accused those calling on him to use increased tax receipts for a major injection of cash into the economy and services of being “reckless”.
He told the BBC’s Andrew Marr Show: “It’s not money in the wallet because we are borrowing a huge amount of money.
“Remember, we have over £1.7trillion worth of debt. This isn’t money in a pot. What is being speculated on is whether we might not have borrowed quite as much as we were forecast to borrow.”
Hammond said he saw his role as ensuring “we have reserves in the tank, so as we embark on the journey that we will be taking over the next couple of years, we are confident that we have got enough gas in the tank to see us through that journey”. Shadow Chancellor John McDonnell said the National Living Wage should be increased to give workers a “pay-rise”.
He said this, along with reversing changes to disability benefits and a cash injection for the NHS, could be funded by reversing £70billion in corporation, capital gains and inheritance tax cuts.
SNP economy spokesman Stewart Hosie MP said a hard Tory Brexit is the biggest threat to the economy and the Chancellor must set aside funds from his pot to deal with the key threats.
Hosie said: “This budget will reveal the full Brexit bombshell – a hard Tory Brexit is undoubtedly the biggest threat facing the economy.
“The Chancellor must set out how this Budget will help mitigate the impact of leaving the EU.
“Philip Hammond must set out how he will support UK industries facing trade barriers, and how he will fill the black hole left by the loss of EU funding for universities, businesses, and key sectors of our economy like agriculture.”
Meanwhile, a Holyrood committee insisted Scotland should have its own tailor-made deal in the UK’s Brexit.
The SNP-led European Committee called for a “bespoke solution” for Scotland.
Their report echoed the Holyrood Government’s call for Scotland’s continued access to the single market, warning Brexit will have “profound consequences” for our economy and future prosperity
The committee want the UK Government to respond to the Scottish Government’s Scotland’s Place In Europe paper before Article 50 is triggered.
Committee convener Joan McAlpine MSP said: “Our evidence suggests that membership of the EEA, for example, would be one route that could provide an easier transition out of the single market than a hard Brexit.”
The committee’s Tory MSPs Jackson Carlaw and Rachel Hamilton dissented from a number of points in the report’s conclusions.
The report also calls for clarity on the potential impact on devolution of the repatriation of powers from the EU.