Philip Hammond had a chance to excite the nation about Brexit, but he blew it
Abudget filip for the economy? Not with fiscal Philip in Charge!
There are few occasions when a Chancellor has the ability to define the economic future of the country and Philip Hammond has missed this massive opportunity.
While the Chancellor has at last acknowledged the need to fund and prepare for Brexit by allocating £3 billion, he has not grasped the immediate opportunity that Brexit provides for the economy.
Contrary to the pre-budget assertions of many commentators that the Chancellor had little room for manoeuvre (which may be true in the very near term), the prospect of Brexit actually provided him with the scope to define the long-term direction of travel of the economy, in fact for the best part of the current Parliament.
Not only would that have boosted business confidence and thus produced a self-fulfilling filip to the economy, it would also have provided the much needed certainty demanded by businesses (Remain and Leave orientated alike) so much so because the benefits of Brexit which the Chancellor could have deployed are entirely and unilaterally within the gift of the government, a state of affairs which lends itself to providing certainty. In these circumstances, if the government commits then it is likely to happen, whatever the EU and others do.
This would have given reassurance to those businesses who are contemplating alternative plans to instead back Britain through the upcoming period of change. Confidence is self-reinforcing and certainty cannot be secured with so many moving parts. The Chancellor had his chance to nail this and failed.
The fact that the repatriated net contribution had the potential to secure business tax cuts in years to come, plus support R&D and investment (especially if we actually leave the EU in 2019, as opposed to leave in name only) was a fantastic gift to Hammond.
The post-Brexit economy also provides the prospect of a boost to growth from; external tariff reduction, trade deals and the streamlining of the bureaucratic aspects of EU regulation, coupled with the repatriation of fishing grounds-altogether up to over 6 per cent of additional GDP growth in prospect. All of this could have been deployed in the Budget at this critical moment. All of which would have generated forecasted additional tax revenues to underpin a promise of increased spending on vital services (NHS, Police, defence). All good, positive and exciting.
Unfortunately, the wilful resistance to such thinking in the Treasury and elsewhere meant that the programme announced in the Budget was totally overshadowed by what might have been achieved in a budget for Brexit, a budget for a new economic model.
With the notable exceptions of the announcements to provide some relief to the NHS, on stamp duty and on housing, (which at least recognised the complexity of increased provision), what we witnessed was a political budget statement containing amusing ditties, ripe for backfire, but which was in practice pettifogging and unimaginative. Not surprising that a minister described Hammond as someone who can count beans, but can’t conceptualise them.
This budget represented the apogee of the government’s handling of the Brexit economy and raises significant questions about the ability of the current leadership to deliver for the country what is readily within their grasp, not least the competence and leadership of “anti-filip Phil”.
John Longworth is Co Chairmen of Leave means Leave and a Member of the Advisory Board of Economists for Free Trade. He was formerly Director General of the British Chambers of Commerce.
November 22nd, 2017: Telegraph