No-deal Brexit would require emergency budget, says Hammond
Chancellor warns end to austerity plan due to be announced today could be cancelled in a no-deal scenario
Philip Hammond has said the government would look to set an emergency budget if it is unable to reach a Brexit deal with the EU, and warned that its plans to end austerity could be cancelled in a no deal scenario.
The Chancellor told Sky News' Sophy Ridge on Sunday: “If we were to find ourselves in that [no-deal] situation then we would need to take a different approach to the future of Britain's economy. 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.”
Asked if austerity would still end in a no deal scenario, he said: “We would have to wait and see what the situation was”.
Hammond, who is due to deliver his budget to the Commons today at 3.30pm, later told the BBC’s Andrew Marr the government is keeping “fiscal buffers,” so that if the economy “as a result of a no-deal Brexit or indeed something else that we haven’t anticipated needs support over the coming months and years, I have the capacity to provide that support.”
The Observer described his comments as “a strong hint that this would involve significant tax cuts, pushing the UK toward a so-called Singapore-style economic model”.
Shadow chancellor John McDonnell said the remarks showed Hammond was reverting to a plan first floated in January 2017 to turn to the UK into a corporate tax haven, which he claimed would “undermine our manufacturing and, I think, put people’s living standards at risk”.
But Hammond was also criticised by senior Brexiteers, who have repeatedly accused the chancellor of talking down Britain’s economic prospects after Brexit.
Influential backbencher Jacob Rees-Mogg criticised the Treasury's record on Brexit, saying it has been the bastion of Remainerism since the referendum.
The Sunday Telegraph says the Chancellor “has been urged by Downing Street and Tory MPs to spend more in his Budget, and to use the £13billion windfall he has been granted by better-than-expected public finances to include a number of giveaways on Monday”.
Early reports indicate that these Hammond’s budget giveaways today will include package of relief measures for the UK's battered high streets, including cutting business rates by a third for half a million companies. He is also expected to unveil a £30bn package for improving England's roads.
The BBC reports that the government has been under pressure to commit extra funds to the flagship universal credit reform, amid reports that millions of households face losing money under the new system.
There have been growing calls for the Chancellor to be more ambitious or risk having his spending agenda set by the opposition.
Warning the Tories “can’t just be defined as a party that comes in and cleans up after the last Labour government”, former education secretary Justine Greening said: “If we can’t set out a compelling vision for a country with equality of opportunity, then we will do what we always do - we will just end up handing the keys back to Labour. That's the cycle we have to break.”