Philip Hammond: there will be no Brexit budget

Skint

The UK’s new chancellor, Philip Hammond, has said there will be no emergency budget to deal with the economic effects of Brexit, adding that he will deliver an autumn statement as normal.

Hammond’s commitment on his first day at the Treasury is a dig at his predecessor, George Osborne, who had warned before the EU referendum that there would need to be a crisis budget involving tax rises and swingeing budget cuts, including £2.5bn taken from the NHS.

Hammond also said no decision had been taken on when to trigger article 50 to begin formal negotiations with the EU.

The prime minister, Theresa May, is expected to make more appointments on Thursday morning, including jobs at the education, health, work and pensions, international development, energy and agriculture departments.

Arriving for his first day at the Treasury, Hammond said: “The prime minister made clear we will do an autumn statement in the usual way – in the autumn – and we will look carefully over the summer at the situation.

“I’m seeing the governor of the Bank of England this morning and we will take stock. The markets do need signals of reassurance, they need to know we will do whatever is necessary to keep the economy on track.”

Hammond told BBC Radio 4’s Today programme the British economy was entering a new phase. Following the decision to leave the EU, “our economy will change as we go forward and it will require a different set of parameters,” he said.

There were challenges to face in the short term because of the cause of the economic shock of the leave vote on 23 June leading to a pause in investment decisions, Hammond said. He defended his warnings of a “chilling effect” on the British economy, which he made as he campaigned for remain during the referendum.

“The challenge for us is to send signals of assurance as quickly as we can to the international investment community, to British businesses and consumers so we can get those decisions made,” he said.

The chancellor added that the UK would leave the European single market as a result of the Brexit decision but would then negotiate access to it.

“We will come out of the single market as a result of our decision to leave the European Union,” he told LBC radio. “The question is how we negotiate with the European Union, not from the point of view of being members but from the point of view of being close neighbours and trade partners.”

The timing for deficit reduction had to be reconsidered, Hammond said, and ratifying a new deal with the EU would have to be agreed by 27 national parliaments so would take some time.

He had previously suggested it would take more than six years but refused to repeat this estimate of the timing, only saying he hoped it would be “sooner rather than later”.

He continued: “If there is one thing that is damaging our economy today it is uncertainty … [businesses] want to know on what terms they will be able to sell to the single market.”

The chancellor said the new government had not yet discussed Heathrow expansion but he was bullish on plans for a new nuclear power station at Hinkley Point following warnings from the government spending watchdog that the project would cost an extra £30bn in “top-up payments” from consumers.

“Delivering a reliable power supply is an absolute prerequisite for a modern, dynamic, functioning economy, and we have to make sure we generate power needed for the UK grid. We have to make sure that project goes ahead,” he said.

Key positions of state were filled on Wednesday night, with Boris Johnson appointed as foreign secretary, Amber Rudd going to the Home Office and leading Brexiters Liam Fox and David Davis responsible for international trade and Brexit negotiations respectively.

Johnson said he was both humbled and proud to be given the Foreign Office, despite some incredulity at the appointment from world leaders and observers because of the former London mayor’s gaffe-prone attempts at diplomacy.

They include in the past year alone calling Barack Obama “part-Kenyan” and implying that led him to dislike Britain, as well as writing an offensive poem about Turkey’s president, Recep Tayyip Erdoğan.

Mark Toner, spokesman for the US Department of State, could not hide a smile when told about the appointment. “Frankly, this is a relationship that goes beyond personalities,” he said.

Overnight, May took calls from several world leaders, the first from the German chancellor, Angela Merkel. She also spoke to the French president, François Hollande, and Ireland’s taoiseach, Enda Kenny.

A Downing Street spokesman said May had “emphasised her commitment to delivering the will of the British people to leave the European Union”.

“The prime minister explained that we would need some time to prepare for these negotiations and spoke of her hope that these could be conducted in a constructive and positive spirit,” the spokesman added.

Speaking from Kyrgyzstan, Merkel invited May to Germany and indicated they would meet for talks at the G20 summit in September. The spokeswoman added: “They agreed that they wanted to establish a constructive relationship, recognising the importance of close cooperation between the UK and Germany.”

May spoke to Hollande about the importance of security, defence and joint work on border controls in Calais, as well as offering her best wishes for Bastille Day.

Kenny and May “both agreed that the strong collaboration between our countries should continue and the taoiseach offered to visit London soon for talks on how they could best work together to achieve this”.

Powered by Guardian.co.ukThis article was written by Jessica Elgot, for theguardian.com on Thursday 14th July 2016 09.17 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010