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Why Philip Hammond hasn't made a radical break with George Osborne

The Chancellor has long been a fiscal conservative and Brexit dominates all else.

On 10 October 1974, the day Philip Hammond began at Oxford University, Harold Wilson's final Labour administration was elected. That government, Hammond later recalled, "ended in disaster" five years later. The "winter of discontent" was a formative experience for the future Chancellor. He came to believe that the "first responsibility" of government was to "promote economic stability, sound money, and prudent public finances".

Those who assumed that Hammond's postponement of George Osborne's surplus target was the prelude to a Keynesian spending splurge were always likely to be disappointed. The change in stance was an acceptance of reality, rather than an ideological statement. Osborne himself, renowned for missing his self-imposed targets, had already conceded that the goal was unachievable. Hammond's decision did not, however, mark the end of austerity. Unprotected departments have been asked to model cuts of up to 6 per cent by 2020. Osborne may have left the Treasury but under Hammond, his deputy from 2007-10, Osbornomics endures.

The new Chancellor's refusal to fund new spending through greater borrowing (preferring tax rises or cuts) is another mark of his fiscal conservatism. But there are other reasons why Hammond's first Budget on Wednesday will not herald a radical break with his predecessor. As an economic event, the Chancellor's statement is secondary to the triggering of Article 50 later this month. The deal that the UK does (or does not) strike with the EU will do far more to shape its destiny than the Treasury. 

Hammond, a teenage goth and swashbuckling entrepreneur before he was christened "spreadsheet Phil", has threatened to change Britain's "economic model" if the country is locked out of the single market. The Chancellor and Theresa May (who echoed his warning) have said little on what this would entail. But the implication is that the UK - a mainstream, mixed market economy - would aggressively cut taxation and regulation. Singapore is traditionally cited as a model, though the city state's dirigiste approach means the quasi-tax havens of Ireland and Luxembourg are more apt comparisons. The EU has long feared the economic harm that a libertarian UK could inflict on it.

The seeming incompatibility of this approach with May's vision of a reformed capitalism and a more interventionist state has led some to argue that the threat is a mere negotiating tactic. Others question why, if free market policies would stimulate growth, the government does not pursue them regardless of Brexit. But the Conservatives' focus on EU withdrawal means there is little pressure on Hammond from the Thatcherite right to do so. Eurosceptics are satisfied by the Chancellor's acceptance of their foremost goal: withdrawal from the single market. By way of return, Hammond, who has forged close relations with David Davis, has secured backing for a transitional arrangement.

As an instinctive pragmatist, Hammond's approach will be shaped by events. In the age of Brexit, the Chancellor's eschewal of political pyrotechnics is fortunate. More than most, he knows that the real action will take place elsewhere.

George Eaton is political editor of the New Statesman.

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Inside a shaken city: "I just want to be anywhere that’s not Manchester”

The morning after the bombing of the Manchester Arena has left the city's residents jumpy.

On Tuesday morning, the streets in Manchester city centre were eerily silent.

The commuter hub of Victoria Station - which backs onto the arena - was closed as police combed the area for clues, and despite Mayor Andy Burnham’s line of "business as usual", it looked like people were staying away.

Manchester Arena is the second largest indoor concert venue in Europe. With a capacity crowd of 18,000, on Monday night the venue was packed with young people from around the country - at least 22 of whom will never come home. At around 10.33pm, a suicide bomber detonated his device near the exit. Among the dead was an eight-year-old girl. Many more victims remain in hospital. 

Those Mancunians who were not alerted by the sirens woke to the news of their city's worst terrorist attack. Still, as the day went on, the city’s hubbub soon returned and, by lunchtime, there were shoppers and workers milling around Exchange Square and the town hall.

Tourists snapped images of the Albert Square building in the sunshine, and some even asked police for photographs like any other day.

But throughout the morning there were rumours and speculation about further incidents - the Arndale Centre was closed for a period after 11.40am while swathes of police descended, shutting off the main city centre thoroughfare of Market Street.

Corporation Street - closed off at Exchange Square - was at the centre of the city’s IRA blast. A postbox which survived the 1996 bombing stood in the foreground while officers stood guard, police tape fluttering around cordoned-off spaces.

It’s true that the streets of Manchester have known horror before, but not like this.

I spoke to students Beth and Melissa who were in the bustling centre when they saw people running from two different directions.

They vanished and ducked into River Island, when an alert came over the tannoy, and a staff member herded them through the back door onto the street.

“There were so many police stood outside the Arndale, it was so frightening,” Melissa told me.

“We thought it will be fine, it’ll be safe after last night. There were police everywhere walking in, and we felt like it would be fine.”

Beth said that they had planned a day of shopping, and weren’t put off by the attack.

“We heard about the arena this morning but we decided to come into the city, we were watching it all these morning, but you can’t let this stop you.”

They remembered the 1996 Arndale bombing, but added: “we were too young to really understand”.

And even now they’re older, they still did not really understand what had happened to the city.

“Theres nowhere to go, where’s safe? I just want to go home,” Melissa said. “I just want to be anywhere that’s not Manchester.”

Manchester has seen this sort of thing before - but so long ago that the stunned city dwellers are at a loss. In a city which feels under siege, no one is quite sure how anyone can keep us safe from an unknown threat

“We saw armed police on the streets - there were loads just then," Melissa said. "I trust them to keep us safe.”

But other observers were less comforted by the sign of firearms.

Ben, who I encountered standing outside an office block on Corporation Street watching the police, was not too forthcoming, except to say “They don’t know what they’re looking for, do they?” as I passed.

The spirit of the city is often invoked, and ahead of a vigil tonight in Albert Square, there will be solidarity and strength from the capital of the North.

But the community values which Mancunians hold dear are shaken to the core by what has happened here.

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