Ever since entering the Treasury, Philip Hammond has been charged by Brexiteers with excessive gloom. They fear that his “pessimism” (others would say realism) could have a chilling effect on growth. The Chancellor pleased and surprised Leavers in his Autumn Statement by hailing “an economy which has confounded commentators at home and abroad with its strength and its resilience”.
But he could not avoid the OBR’s grim forecasts: the national debt rising to 90 per cent of GDP, growth falling to 1.4 per cent and inflation surging. Having once championed the independent body, many Brexiteers have now set themselves against it. Iain Duncan Smith said: “The key thing is that the OBR has been wrong in every single forecast they’ve made so far. On the deficit, on growth, on jobs, they’ve pretty much been wrong on everything.” Jacob Rees-Mogg declared: “Experts, soothsayers, astrologers are all in much the same category.”
Hammond, unsurprisingly, chose not to join the attack. As he rightly noted, the OBR’s forecasts are “noticeably more upbeat” than those of the Bank of England. Indeed, as the body itself has pointed out, its greatest failing in recent times has been its excessive optimism.
Rather than regarding Hammond as a liability, allies argue that the Brexiteers should see him as an asset. His sober and reassuring manner makes him well-equipped to deliver bad news (as Alistair Darling was). A less restrained figure would have caused far more alarm with yesterday’s debt and deficit forecasts. Hammond is on course to borrow more than Ed Balls planned but no one could frame him as a drunken Keynesian.
Should Brexit surprise on the upside, Hammond will also be well-placed. As a senior Tory MP noted, his clear-eyed approach means he will have greater credibility when announcing good news. But Hammond must first avoid becoming a scapegoat for the bad.