At the Conservative Party conference today, the chancellor said that the deficit remained unsustainable, but acknowledged the decision to leave the European Union had “introduced new fiscal uncertainty”.
Hammond was speaking after Theresa May indicated the UK would trigger the EU exit process by the end of next March, which means the country could leave the bloc in the first three months of 2019. Hammond pledged to maintain fiscal discipline in a “pragmatic” way.
“The fiscal policies that George Osborne set out were the right ones for that time,” he stated. But when times change, we must change with them. So we will no longer target a surplus at the end of this parliament.”
He will announce a new fiscal framework in the Autumn Statement on 23 November that controls day-to-day public spending, delivers value for money and aims to get Britain living within its means.
“At the Autumn Statement in November I will set out our plan to deliver long-term fiscal sustainability, while responding to the consequences of short-term uncertainty and recognising the need for investment to build an economy that works for everyone,” he told delegates. It will be “a new plan for the new circumstances Britain faces,” he said.
However, the chancellor indicated that this plan would remain flexible, highlighting the potential need for changes in government spending plans in the years ahead as the country negotiates its exit from the EU.
“As the economy responds over the coming months, fiscal policy may also have a role to play,” he stated. “So let me be clear. Throughout the negotiating process, we are ready to take whatever steps are necessary to protect this economy from turbulence.”
Hammond also extended the government’s previous pledge to guarantee European structural and investment funding for projects that are agreed before the Autumn Statement.
Today, he said he could go further and pledge to meet funding for projects that secure multi-year EU funding deals before the UK exits the bloc, provided they meet UK priorities and value for money criteria.
