Philip Hammond: No-deal Brexit will leave 'no money' for tax cuts
The chancellor uses what is likely his last chance to speak from the despatch box to warn he could vote to try to block the plan.
Wednesday 3 July 2019 10:10, UK
Philip Hammond has warned Tory leadership candidates a no-deal Brexit would cost the economy 拢90bn, and leave "no money available for longer-term聽tax cuts or spending increases".
In what is likely to be his last appearance at the House of Commons despatch box as chancellor, Mr Hammond also gave a strong indication he would join Tory rebels to vote against leaving the EU without a withdrawal agreement from the backbenches.
When Liberal Democrat MP Tom Brake described pledges being made by Jeremy Hunt and Boris Johnson as "unfunded bribes" Mr Hammond responded by saying he was "not in favour of ad hoc spending commitments or tax commitments being made", adding that the likely no-deal hit to the exchequer was not being factored in.
"We've built up around £26-27bn of fiscal headroom and the purpose of having that headroom is precisely in order to protect the UK economy from the immediate effects of a possible no-deal exit," he continued.
"But I have no doubt whatsoever that in a no-deal exit we will need all of that money and more to respond to the immediate impacts of the disruption of a no-deal exit, and that will mean there is no money available for longer-term either tax cuts or spending increases.
"But let me go further, the government's analysis suggests that in a disruptive no-deal exit there will be a hit to the exchequer of about £90bn.
"That will also have to be factored in to future spending and tax decisions."
Shadow chancellor John McDonnell praised him for "very eloquently" setting out his opposition to no-deal, urging him to commit to join Labour's efforts to block such an outcome.
Mr Hammond responded, admitting no-deal could not be entirely ruled out due to the possibility of the EU rejecting any further extension, but underlined his opposition to such an outcome.
"We cannot... rule out that that could happen because it is not entirely in our hands," he said.
"But I do agree with him [Mr McDonnell] that it would be wrong for a British government to seek to pursue no-deal as a policy, and I believe that it will be for the House of Commons, of which I will continue proudly to be a member, to ensure that that doesn't happen."
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As the session concluded John McDonnell offered the chancellor a "parting gift" across the despatch box, which he described as a "little red book" that contained "a guide to London's rebel walks that we hope he'll enjoy in his leisure periods".
Speaking to journalists after the exchange in the Commons, Mr McDonnell predicted that Philip Hammond would soon become one of "the most influential Tory backbenchers".
"I thought he was ferocious in his attack on no-deal, emphasising the £90bn cost to the economy that the Treasury has identified for a no-deal Brexit, and was making it clear that he would do everything he could do avoid it," said the shadow chancellor.
"If he is on the backbenches he will be one of the most influential Tory backbenchers to align himself with our own position of opposing no-deal"
"Today you saw a vehemence in Philip Hammond that you don't often see on an issue, and he's clearly going to do all he can to oppose, and he's an influential voice in the Tory party and he has, I think, a number of people who will line up with him."