Even officials with leftwing politics hoped that Theresa May would keep George Osborne in place at the Treasury, for two reasons: firstly because he is a considerate boss, and secondly because his exit from frontline politics likely means the end of a 19-year period of dominance by the Treasury, in which, whether under Gordon Brown, Osborne or even under Alistair Darling, whoever has been in office, the Treasury has been in power.
But Philip Hammond was very much the second choice, way ahead of any of the possible figures. Hammond was the biggest beast to back May’s candidacy and was rewarded for the Treasury brief that coalition denied him (he had shadowed the post of Chief Secretary to the Treasury in opposition but the mechanics of the coalition meant the post had to be given to a Liberal Democrat). Before May’s accession to the premiership, he had already lined up with her on negotiations with the European Union and Osborne’s deficit targets (now shelved).
Hammond comes in with the economy looking pre-recessional and with Britain’s future participation in the single market in some doubt. (Hammond has publicly said Britain ought to remain in the single market above all else – May is more concerned about immigration, while the Brexit-backing ministers are divided.)
What ought he to do? The big task is to get the construction industry back on its feet. Happily, although the decline in Britain’s credit rating has made borrowing more expensive, low interest rates at home and abroad make the case for fiscal stimulus stronger than ever, and mean the government can borrow on the cheap. Launching programmes of housebuilding, transport infrastructure and clean energy would be good ways to try to avert or at least ride out any economic shocks. (From an economic perspective albeit not an environmental one, it makes sense to approve new runways at Heathrow and Gatwick, two “shovel-ready” infrastructure projects that have private money behind them.)
But the big victory that Hammond could achieve at the Treasury would be to defeat the Brexiteer ultras and keep Britain in the single market.
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