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13 October 2017

The Brexiteers are attacking Philip Hammond for doing his job: protecting the economy

The Chancellor is being castigated for telling the truth about Brexit.

By George Eaton

The Brexiteers have identified a new enemy of the people: Philip Hammond. The Chancellor is being castigated for his “gloom” and “pessimism” over EU withdrawal.

In the last day, the Daily Mail and Nigel Lawson have called for his sacking. The former denounced Hammond as “treacherous”, the latter accused of him coming “close to sabotage”.

The Chancellor’s sin is his refusal to hail Brexit as a moment of national rebirth. He has this week warned of the “cloud of uncertainty” over the economy and refused to set aside billions of pounds for a “no deal” scenario. Yet far from being a doom-monger, Hammond is merely stating the obvious. Britain has gone from being the fastest-growing G7 economy to the slowest. It has the lowest growth and highest inflation of any major EU country (owing to the pound’s sharp depreciation). Firms are delaying investment for fear of future chaos and consumer confidence has plummeted. 

As Chancellor, Hammond’s duty is to defend the interests of the economy. By highlighting the unambiguous harm Brexit is doing, he hopes to push the government towards a softer approach. Rather than prioritising the reduction of immigration or the reclamation of (narrowly-defined) “sovereignty”, Hammond would prioritise growth.

As he has candidly stated, a “no deal” scenario would be calamitous for the economy. The commitment of billions at this time would deprive public services of limited resources. And planning for “no deal” (an outcome some Brexiteers would relish) risks becoming a self-fulfilling prophecy.

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The attacks on Hammond are reminiscent of those on Alistair Darling in August 2008 when he warned economic conditions were “arguably the worst they’ve been in 60 years” (prompting Gordon Brown to unleash the “forces of hell” against him). Only a month later, following the collapse of Lehman Brothers, Darling’s words appeared overly optimistic. 

Hammond is further charged with insufficient radicalism. Some Conservatives have long aimed to use Brexit as a Trojan Horse to remake the UK as a low-tax, low-regulation utopia. But after the general election, as Hammond has recognised, there is no majority for this vision in either parliament or the country. 

Allies of Theresa May more reasonably complain that the Chancellor is overly hostile to economic interventionism. And Hammond is far from flawless. His first Budget forced one of the swiftest U-turns in history when he was forced to abandon a planned National Insurance rise. At a cabinet meeting earlier this year, he unwisely suggested that public sector workers were overpaid. Colleagues complain of a Chancellor with weak or absent political antennae. 

But the opprobrium heaped on the Chancellor over Brexit is unmerited. Hammond is no starry-eyed Europhile. As recently as 2013, he stated that he would vote Leave in any EU referendum (before backing Remain in 2016). In fraught circumstances, Hammond is a man candidly stating the cost of Brexit and doing his job: to minimise it.