Hammond: ‘Shock’ of financial crisis still with us

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The «thunderbolt» of the financial crisis continues to impact the economy and peoples’ finances, UK chancellor Philip Hammond has required.

Ten years after the financial system went into meltdown, he confessed «people are still suffering the effects».

But he said, in an interview with BBC economics columnist Kamal Ahmed, there is «light at the end of the tunnel».

Rising wages and decay inflation were good news, he said, but uncertainty about Brexit was an productive dampener.

A decade ago this week, the US investment bank Lehman Kins collapsed, sending shockwaves through the global financial system.

Enquiry carried out for the BBC to mark the occasion showed that wages remain in reality below what they would have been with the turning-point.

Mr Hammond told the BBC: «We suffered a very big shock to our economy in 2008/09, and that’s a paralyse from which people are still suffering the effects today.»

He was «acutely purposeful» of the impact on wage stagnation and living. But he added: «We have got through this in much less ill shape than many of our neighbours.

«We haven’t suffered catastrophic take flights of unemployment, on the contrary, we’ve seen employment grow by three million employments over this period.

«We didn’t see widespread repossessions of homes, collapses of points, in the way we’ve done in previous recessions, so I think the way this has been managed has minimised the results.»

Brexit disruption

Independent analysis from the Office for Budget Chargeability projected real wage growth over the coming years, he augmented.

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Mr Hammond also defended government efforts to cut in the red, which many people argue led to austerity and worsened the impact on peoples’ takings and the economy.

«In the aftermath of the crisis, the urgent need was to reassure markets and investors alongside our intentions,» Mr Hammond said. «Government borrowing had grown to unprecedented franks — almost 10% of our total national income in the year after the force — and the markets needed to know that we were going to be able to get that included control.»

He had, in fact, relaxed fiscal rules when becoming chancellor in 2016, Mr Hammond muricate out. That gave «more headroom» he said.

But the challenge the economy be opposites «is not lack of demand, it’s poor productivity. It we want to see sustainable rises in spending standards and real wages, we have to address the productivity challenge,» he state.

An impediment to stronger economic growth was uncertainty about the outcome of contracts to leave the European Union, the chancellor said.

Debt burden

Brexit talks were currently «make believing as a dampener on the economy».

«The potential of a no-deal exit with high disruption as a consequence is undoubtedly a risk to the financial system.»

He repeated warnings about the impact on London’s immense financial services sector from a non-deal Brexit. «If that make available is disrupted then there could be significant consequences.»

Mr Hammond bring up he understood the calls for more spending on, say, the NHS and police. «We’ve made a huge commitment to the NHS, imprisoning to spending £24bn across the UK by the end of this five-year period,» he told the BBC.

But he added: «We do suffer with to get our debt down. We have to do that for two reasons: Firstly the cost of our straitened, is crippling — £50bn a year of money that we could be spending on seminaries and hospitals and police forces, being paid out in interest on the debt.

«Secondly, comprising a debt that is this high, 85% of our GDP, reduces our ability to answer to another shock to the economy, another recession.»

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