The Remain-supporting Chancellor of the Exchequer, Philip Hammond, has threatened that a no-deal Brexit would result in more austerity, putting pressure on Tory Eurosceptics to back the Prime Minister’s unpopular soft Brexit Chequers plan.
The Chancellor is set to announce an end to austerity in his third budget Monday afternoon; however, when making the media rounds Sunday, he said that any Brexit other than Theresa May’s soft Brexit, with its “ongoing harmonisation” and a “common rulebook” tying the UK to European Union rules, could end such budgetary preparations.
Speaking to Sophie Ridge on Sunday, Mr Hammond said: “If we were to leave the European Union without any deal – and I think that’s an extremely unlikely situation but of course we have to prepare and plan for all eventualities, as any prudent government would – if we were to find ourselves in that situation then we would need to take a different approach to the future of Britain’s economy.”
Indicating that he did not have a backup budget plan for a no-deal Brexit, where the UK traded with the EU on World Trade Organization terms, he added: “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.”
On the BBC’s Andrew Marr Show, the Chancellor revived the Project Fear rhetoric, implying that without close alignment with the EU, trade would cease with the bloc altogether, saying: “If our businesses are no longer able to trade with European Union neighbours, if their supply chains are cut off, they will have to find different markets and different ways of doing business.”
Former work and pensions secretary Iain Duncan Smith said that the Chancellor’s dire economic predictions took no account of the £36 billion divorce bill the government would save by leaving without a deal and before the two-year transition.
Chairman of the Tory Eurosceptic European Research Group Jacob Rees-Mogg attacked the treasury for still being “grumpy” about the referendum result, drawing parallels to the office’s “lunatic forecasts” before the June 2016 vote that a Leave mandate would result in massive unemployment and economic disaster.
“The Treasury has been the bastion of Remoanerism since the referendum and indeed before. It came out with all these lunatic forecasts before the referendum as to what would happen purely on a vote to leave,” Mr Rees-Mogg said on Ridge on Sunday.
“So, 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 added.
Meanwhile, The Times published a “State of the Nation” review ahead of Monday’s budget, which notes that since the vote to leave the EU, unemployment is at a 43-year low of just four percent, with youth joblessness at a record low, and employment at a record high. Private pay sector wages is also growing at 3.1 percent, and has been rising faster than the rate of inflation for seven months.
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