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23 November 2016

Philip Hammond’s sleight of hand

The new Chancellor is trying to thread a very tricky knot.

By Stephen Bush

Philip Hammond kicked off the first Autumn Statment by saying he wasn’t going to produce a rabbit out of the hat, a last minute surprise of the kind favoured by Gordon Brown and George Osborne. 

He did, however, perform a cunning sleight-of-hand on public spending, announcing significant wriggle room on the government’s deficit targets, the new setting out a suite of policies that could all have sat happily in his predecessor’s fiscal rule. The numbers may have sounded large but in government spending terms, they are small beer. That £24bn on infrastructure, for example, amounts to less than half what the government will spend on HS2 and is only slightly more than the full cost of Crossrail. 

But what he did was tread a very tricky tightrope: any move that suggests that the British economy might take a post-Brexit hit, or might not get anything other than a fantastic deal out of Brexit, would see him attacked as a panicked and bitter Remainer by the Brexiteers in parliament and the press. Keeping quiet would mean binding his hands should – as looks increasingly likely – Britain end up with a hard landing when it leaves the European Union.

What he’s instead done is give himself increased room for manoeuvre, without actually using any of that room. His hope will be that, when the time comes, he’ll feel the benefit of that freedom without the embarrassment of the U-Turn. The opposition’s task will be expose his pessimism, and widen the gap between Hammond and the government’s Brexit boosters.

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