Speaking in China on Friday ahead of a meeting of the G20 finance ministers, Hammond said that this year’s Autumn Statement could “reset” the public finances if the economy had slowed down.
Hammond’s predecessor George Osborne announced earlier this month that he would abandon his fiscal rule that requires the public finances to be in surplus by the end of the parliament. This came as incoming prime minister Theresa May also indicated she would not seek to stick to Osborne’s target.
Hammond said on Friday that, in the short term, the Bank of England would use monetary policy to address market turbulence following the Brexit vote.
“Over the medium term we will have the opportunity with our Autumn Statement, our regular late year fiscal event, to reset fiscal policy if we deem it necessary to do so in the light of the data that will emerge over the coming months.”
Responding to Hammond’s comments, shadow chancellor John McDonnell said it showed that the new chancellor couldn’t defend George Osborne’s austerity measures.
“But the truth is that these are just warm words from another Tory chancellor. As at present the failed austerity policies of George Osborne are still going ahead and the government are still sticking to the failed fiscal framework,” he added.
“This means that Britain is on hold until Philip Hammond makes up his mind. The Tories clearly had no plan for Brexit and are making it up as they go along.”
