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Hammond warns no-deal Brexit will crush spending plans

By Caoimhe Toman

Date: Thursday 20 Jun 2019

Hammond warns no-deal Brexit will crush spending plans

(Sharecast News) - The new UK prime minister would be forced to abandon spending plans if he went ahead with a no-deal Brexit, finance minister Philip Hammond was set to warn on Thursday.


The warning, to be delivered in Hammond's Mansion House speech to business leaders, was apparently directed at leading candidate Boris Johnson, who has threatened to take the UK out on October 31 without a deal.

Former foreign secretary Johnson is the candidate most likely to replace Theresa May as PM after he won the third round of votes in the party on Wednesday evening. Sajid Javid, Jeremy Hunt and Michael Gove are the remaining contenders.

The final ballots were scheduled for Thursday to decide the final two candidates who will be put to Conservative Party members.

Pro-EU Hammond is likely to lose his job if Johnson is elected. He was expected to tell business leaders that any leadership candidate must have a plan B if renegotiations with the EU fail, or their "job will be on the line".

He will say the two "core, unshakeable, beliefs" of the Conservative party are under threat - meaning belief in prudent management of public finances and in the four nations of the UK.

According to Hammond a no-deal Brexit would soak up £26.6bn of "fiscal headroom" that has been set aside potentially to be used to increase spending or cut taxes.

"There is a choice. Either we leave with no deal ... or we preserve our future fiscal space. We cannot do both," Hammond is expected to say.

Hammond will say that a hard Brexit will leave the UK economy permanently smaller and urges the candidates to be honest with the public: "The leadership contenders need realistic strategies for taking the UK economy out of the holding pattern in which it has been stuck for the last nine months and landing it safely on the runway marked 'prosperity Brexit'".

"If the new prime minister cannot end the deadlock in Parliament, then he will have to explore other democratic mechanisms to break the impasse, because if he fails, his job will be on the line - and so, too, will the jobs and prosperity of millions of our fellow citizens." Hammond was expected to add, hinting at a second referendum, or even a general election.

(Additional reporting by Frank Prenesti)

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