LONDON (Reuters) – British finance minister Philip Hammond warned rebels in his Conservative Party that he would have to shortly reverse plans to ease practically a decade of austerity if London fails to get a Brexit deal.
FILE PHOTO: Chancellor of the Exchequer Philip Hammond leaves 11 Downing Street in London, Britain, October 15, 2018. REUTERS/Peter Nicholls
Hammond, who is because of announce an annual price range plan on Monday, mentioned he would be capable to present voters that “their hard work has paid off” so long as Britain achieves a clean exit from the European Union in 5 months’ time.
Hammond has angered many members of his Conservative Party by arguing Britain ought to stay near the EU after Brexit and Prime Minister Theresa May has to this point didn’t bridge the divide in her celebration.
Many traders and companies are anxious that the possibility of a no-deal Brexit is rising.
Hammond mentioned he was assured that London and Brussels would settle their variations however “if we don’t get a deal … 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,” Hammond mentioned in an interview with Sky News broadcast on Sunday.
Most economists say Britain would endure an financial shock if it leaves the EU with no deal.
The British pound sank to a two-month low in opposition to the greenback on Friday and was weaker in opposition to the euro.
But Jacob Rees-Mogg, a number one pro-Brexit lawmaker within the Conservative Party, downplayed the financial dangers of Brexit.
“The Treasury has rather embarrassed itself, has a lot of egg on its face from getting its Brexit-related forecasts so wrong so far and I think there is an element within the Treasury that is still grumpy about Brexit and that’s a pity,” he mentioned.
In his price range on Monday, Hammond is predicted to announce an extra enchancment in Britain’s borrowing projections, giving him a little bit of room to ease practically 10 years of steep cuts in lots of areas of public companies.
But regardless of the price range deficit falling sharply, Britain’s debt ranges stay excessive, limiting how a lot Hammond can loosen up his spending squeeze.
He mentioned on Sunday that the most important improve in spending in his price range had already been introduced when May mentioned 4 months in the past that extra money could be earmarked for the well being service.
On Monday, he’s set to announce different measures together with extra spending on roads to ease congestion and a tax lower for small retailers to assist them compete in opposition to on-line competitors.
He hinted on Sunday that he would offer cash to melt the impression of modifications to Britain’s welfare system.
Hammond mentioned the Bank of England in addition to the finance ministry would have to take motion if there’s a no-deal Brexit.
In the quick time period, Hammond mentioned he may use a few of the respiratory area he has saved for himself inside his fiscal targets to assist the financial system.
Writing by William Schomberg; Editing by Alison Williams and Elaine Hardcastle