He’s less than sanguine about the economic deal we’re going to get from Brexit, but the former foreign secretary has high hopes for HS2. As new chancellor Philip Hammond takes over the economic reigns of the country, Business Advice examines his track record.
Though his previous role in the cabinet saw him more concerned with national safety than economic policy, Hammond was closely involved in shaping spending decisions in his 18-month stint as transport secretary under the coalition government, while his degree in PPE from Oxford University means he has more formal training in economics than his predecessor George Osborne.
A vocal opponent of leaving the European Union, the new chancellor nevertheless supported the holding of a referendum, arguing in parliament in 2014: “What business needs more than anything is certainty. So long as we do not allow the British people to have their say, we face continued uncertainty around this question. We need to settle this once and for all for the sake of Britain. Once it is settled, we can get on with our business.”
But in the run-up to the vote, he cautioned that getting a good economic deal for the country will be a challenge, warning: “If we reject the unique and privileged position in the European Union that is on offer to Britain, the mood of good will towards Britain will evaporate in an instant.”
While dealing with the nitty-gritty of Brexit negotiations will be the responsibility of his fellow newly-appointed cabinet ministers David Davis – in charge of EU relations – and Liam Fox – tasked with international trade – Hammond will have to deal with the impact of this on the UK economy, and has highlighted that reassuring markets will be key, warning back in June that “business hates uncertainty” and emphasising the need for “security and stability”. One of his first actions as chancellor was to rule out an emergency budget.
The influence Hammond will have on shaping international trade is likely to be wielded improving the country’s trade ties with China, building on work he did strengthening diplomatic relations with the country as foreign secretary
In January 2016, he boasted: “Last year’s state visit by president Xi Jinping delivered substantial benefits for the UK economy and established a new global partnership. Last week in Beijing I launched a new visa service to boost tourism and business, announced plans to build a new embassy to better serve our interests and reflect the level of our bilateral relationship.”
In the longer term, Hammond threw his weight behind the HS2 rail project as transport secretary, so it seems likely that he’ll be keen to press ahead with the project despite skyrocketing costs. “By tackling the North-South divide through the transport infrastructure, we can start to address those economic disparities that have held the country back for too long and take decisions that will promote long-term, sustainable growth in the North [of England] and the Midlands,” he wrote in an editorial in The Telegraph in 2011.
But the new chancellor has consistently opposed the building of a third runway at Heathrow airport, arguing: “We want to work with business and other stakeholders to ensure that Heathrow becomes better, not bigger.”
If the UK does fall into another recession, small firm owners shouldn’t take for granted that ambitious small-business policies will be safe from the chop. Hammond was a vocal critic of Alistair Darling’s 2010 budget, in which the Labour chancellor cut business rates for 500,000 small firms, increased the Annual Investment Allowance to £100,000 and doubled entrepreneur’s relief for capital gains tax.
Talking about the market response to Darling’s plans, he said: “Their verdict is clear, and it is getting louder. It is summarised very neatly by the European Commission’s view that the government’s plans are ‘not sufficiently ambitious’ and that ‘additional fiscal tightening’ is necessary.”
To discover what Theresa May means for the British economy, have a read of this.
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