Hammond: Budget relies on Brexit deal
PHILIP HAMMOND has warned the UK economy will have to strike out in a “different direction” if the Government is unable to agree a Brexit deal with Brussels.
On the eve of the Budget yesterday, the Chancellor said he would have to tear up his plans and issue a new Budget if Britain leaves the EU next March without an agreement in place.
Despite Theresa May’s promise at the Conservative Party conference that the era of austerity was coming to an end, Mr Hammond played down the prospects of a spending giveaway when he makes his speech to the Commons today.
He said detailed departmental allocations would have to wait until the spending review next year by which time the outcome of the Brexit negotiations is expected to have become clear.
Shadow chancellor John Mcdonnell said he was “shocked” by Mr Hammond’s remarks which, he said, showed ministers were preparing to move to a Singaporestyle low tax, low regulation economy following a no-deal Brexit.
Mr Hammond insisted he remained confident the Government would reach an agreement with Brussels but said they had to be prepared for any eventuality, including a no-deal break.
“We would need to look at a different strategy and frankly we’d need to have a new Budget that set out a different strategy for the future,” he told Sky News’s Sophy Ridge on Sunday programme.
“We would take appropriate fiscal measures to protect the economy, to prepare us for the future and to strike out in a new direction that would ensure that Britain was able to succeed, whatever the circumstances we found ourselves in.”
With Tory MPS increasingly restive over the impact of the roll-out of Universal Credit on low income families, Mr Hammond signalled he was ready to provide additional support to ease the transition to the new system.
“If we find cliff edges and difficulties, frictions in the move from the old benefits system to Universal Credit, then of course will always try to smooth those out and be pragmatic about it,” he said.
The Chancellor will also use the Budget to set out plans for a £28.8 billion national roads fund for major routes, with a further £420 million for local pothole repairs, in part-funded by ring-fencing revenues from vehicle excise duty.
He is also expected to find extra cash for defence, social care, and an extension of superfast broadband to remote rural areas as well as a temporary cut in business rates for small firms. However, he indicated that any further loosening of the purse strings would have to wait until the outcome of the Brexit negotiations is clear.
“Once we get a good deal from the European Union and the smooth exit from the EU, we will be able to show the British people that the fruits of their hard work are now at last in sight,” he told The Andrew Marr Show.