Monday’s Budget comes at a delicate point in the Brexit negotiations. I say in The Sun this morning, that a bolder government and Chancellor would turn this timing to their advantage. They would use this Budget to give a preview of what the UK would do in the event of no deal. No deal planning shouldn’t just be about logistics, but about how the UK would respond economically to this challenge.
Philip Hammond could announce that if it is ‘no deal’ the UK would slash to zero tariffs on manufactured goods from all around the world, bring in complete tax relief on all business investment for the next three years and cut capital gains tax.
The EU, which doesn’t want a hyper-competitive economy 26 miles off its coastline, would notice. It might, as no deal planning is meant to do, make the EU more prepared to compromise a bit to reach a deal that’ll be acceptable to the UK.
But there is little sign of such an approach being planned. Hammond will avoid sounding downbeat and hail the resilience of the British economy. But he’ll say little that’ll make the EU sit up and take notice.
So, what will be in the Budget? Well, Theresa May has thrown Hammond some hospital passes with her pledges of a huge amount more money for the NHS and that austerity is ending. Better than expected tax receipts, though, have taken some of the pressure off Hammond. I understand that the Budget will contain several hundred million more for social care. Cabinet colleagues also expect Hammond to put more resources into universal credit. There’ll also be a package of measures to try and revive the high street.
This may well be Hammond’s last Budget. It is far from certain that Theresa May will be PM in a year’s time, and if she is she’ll probably have done a major reshuffle which will involve a new Chancellor. But I wouldn’t expect Hammond to go out with fireworks, that’s not his style.