No-deal Brexit could wipe out £26.6bn ‘war chest’

21 Jun 19

A “damaging” no-deal Brexit would wipe out the billions of pounds the government has built up to spend on public services, the chancellor has warned.

Phillip Hammond said leaving without a deal with the EU would undermine plans for additional spending and tax cuts, delivering his annual speech at Mansion House last night.

“A damaging no-deal Brexit would cause short-term disruption to our economy, soaking-up all the fiscal headroom we have built,” Hammond told delegates.

“There is a choice,” Hammond explained: “Either we leave with no-deal or we preserve our future fiscal space – we cannot do both”.

The chancellor announced in the Spring Statement in March the government’s spending envelope was £26.6bn – higher than the £15.4bn forecast – which he promised to include in the next Spending Review, so long as Brexit happened with a deal.

Hammond said the nation’s public finances have been “painstakingly rebuilt” over the past nine years of austerity.

Indeed, data from the Office for National Statistics from April showed a 17-year low in public borrowing.

But Hammond claimed that the fiscal headroom he has built up would only be available to use in the event of a “smooth and orderly” exit from the EU.

He also warned that leaving with no-deal would pose a threat to the union of the United Kingdom.

He said: “I cannot imagine a Conservative and unionist-led government, actively pursing a no-deal Brexit; willing to risk the union and our economic prosperity, and a general election that could put Jeremy Corbyn in Downing Street, to boot.

“And I will not concede the very ground we stand on. I will fight, and fight again, to remake the case for pragmatism and, yes, for compromise in out politics – to ensure an outcome that protects the union and the prosperity of the United Kingdom.”

Prime minister Theresa May claimed austerity was over in her Conservative Party speech in October last year.

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