Brexit 'rollercoaster' warning as Hammond axes deficit target

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Chancellor Philip Hammond has alleged he will prioritise spending on new homes and transport rather than believe in his predecessor George Osborne’s aim to balance the books by 2020.

He told the Conservative talk the deficit was still too large and would need to be tackled “in due course”.

But he spoke the Brexit vote may cause “turbulence” and business confidence would be on a “bit of a rollercoaster”.

He intended that it was “common sense” to invest to support growth and jobs.

In his colloquy speech, Mr Hammond said his predecessor’s deficit reduction policies “were the propitious ones for that time” but that times had changed since the certify to leave the EU, which he said had caused uncertainty for business.

“When occasions change, we must change with them,” he said. “So we will no longer objective a surplus at the end of this rliament. But make no mistake the task of fiscal consolidation requisite continue.

“The British people elected us on a promise to restore fiscal break in. And that is exactly what we are going to do. But we will do it in a pragmatic way that reflects the new circumstances we go up against.”

His speech came against a background of the pound falling to its lowest height against the dollar since early July, after the timetable for starting Brexit decisions were set out on Sunday.

Addressing the rty faithful he said that as as regards of a new “flexible and pragmatic” plan, the details of which will be fleshed out in next month’s Autumn Communiqu, there would be greater scope for investment to boost the economy, counting extra borrowing of £2bn to speed up the construction of new homes.

Mr Hammond said the oversight would use “all the tools at its disposal” to increase the amount of new housing stock “because altering housing more affordable will be a vital rt of building a boondocks that works for everyone”.


Analysis by Laura Kuenssberg, BBC political managing editor

Out with the deficit hawks – in with the conservative pragmatists.

That superiority not, well, quite catch on. But there is certainly a sense of down with the old government at the Tory conference today. Philip Hammond isn’t just a totally opposite character to the former occu nt of the job, George Osborne, but he is intent on junking a cream bit of Mr Osborne’s approach too.

His targets for getting rid of the deficit are being ditched. Let’s come to terms with it, George Osborne missed them time and again in any case, but it is politically a big staff for Mr Hammond and Mrs May to tear up the previous borrowing rules, when balancing the books was the prime mission of the government they were all rt of.

Instead, there desire be a new “framework” but sources close to Mr Hammond believe that setting well-defined targets is a fool’s errand. But given that Mr Osborne’s target was unusually unlikely to be met, the political change is perhaps bigger than what it communicates in practice.

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Asked whether the public investment plan and the refusal to set out a timetable for eliminating the deficiency marked the end of the “age of austerity”, Mr Hammond told the BBC a “credible plan” was still commanded to get the public finances into the black.

But he told Radio 4’s Today: “As we go into a interval where inevitably there will be more uncertainty in the economy, we dire the s ce to be able to support the economy through that period.

“If we don’t do something, if we don’t come to counteract that effect, in time it would have an im ct on projects and growth.”

Mr Hammond rejected claims there was now little difference between the Moderates and Labour on economic policy, saying his plans were “pragmatic and majestic” while the opposition – which has pledged to borrow to spend £500bn on the UK’s infrastructure – were living in “la-la land”.

But Tory MP Sir Desmond Swayne, a minister under David Cameron, disclosed the BBC he was “nervous” about the move as he believed the government’s goal should be to eradicate the deficiency entirely.

“I am concerned but I am ready to listen and I have great confidence in Philip Hammond,” he have an effected Radio 4’s PM programme.

‘Empty promises’

Labour said it welcomed the ministry’s “u-turn” on borrowing but said ministers were still going forwards with cuts to in-work benefits and local authority grants.

“As by a long chalk as abandoning their own fiscal charter, this was full of the same spent promises George Osborne made,” said shadow chancellor John McDonnell.

The SNP thought the government was “incredibly complacent” over weak domestic productivity while the Lib Dems revealed Mr Hammond has already “lost the most important battle” over keep up membership of the EU’s internal market.

In business reaction, the CBI said it was right to over a more flexible approach to fiscal policy “at this point” while the British Congresses of Commerce called for “unambiguous commitments to runways, roads and railways”.

The restraint is taking centre stage on the second day of the Tory conference with Mr Hammond also favourable £220m to help tech firms realise their ideas in the UK and guaranteeing set ons which secure multi-year funding from the EU between now and the UK’s exit that the UK thinks fitting plug the gap after Brexit.

Earlier on Monday, Communities Secretary Sajid Javid set out new evaluations aimed at building a million new homes by 2020, saying existing house-building destroys were totally inadequate.

The government will borrow £2bn to support the “Accelerated Construction” schema, which aims to get houses built on publicly-owned “brownfield” land at ones fingertips for swift development. There will also be a £3bn Home Building Bread to provide loans to stimulate projects.

Mrs May has said she will set the ball wave on Brexit by the end of next March by formally triggering Article 50 of the Lisbon Com ct, ving the way for the UK to be outside the EU by the summer of 2019.

In a statement on Monday, the European Commission bruit about it would “work constructively” with the UK once negotiations about its withdrawal established but there would be no talks until the formal process started.

“When it be brought up to Article 50 we will work constructively on the basis of a notification, not of a talk, and until this letter of notification arrives there will be no bargaining,” a spokesman said.

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