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Brexit: UK economy faces turbulent times, warns Hammond

By Andrew Woodcock

Published 04/10/2016

Chancellor of the Exchequer Philip Hammond at the podium
Chancellor of the Exchequer Philip Hammond at the podium
Prime Minister Theresa May and husband Philip applaud on the second day of the Conservative Party conference in Birmingham yesterday

Chancellor Philip Hammond has unveiled a set of policies designed to shore up Britain's economy during a period of "turbulence" which he has forecast as a result of Brexit.

Speaking to the Conservative conference in Birmingham, Mr Hammond offered a new guarantee to continue payments of any multi-year EU grants secured by British businesses and organisations before withdrawal - probably in March 2019.

And he announced £220m of new funding for the tech sector to support efforts to transform biomedical and computer innovations into marketable products.

Mr Hammond warned that the UK economy faces a "rollercoaster" ride over the coming two years as the UK negotiates a new relationship with its EU partners.

But he said he was ready to take "whatever steps are necessary to protect this economy from turbulence".

And he hinted that this could include tax cuts to stimulate economic activity, telling delegates that "fiscal policy may also have a role to play".

Mr Hammond said that action was needed to boost productivity, invest in infrastructure and tackle the "dangerous" gap between London and the "left behind" regions of the UK, in order to ensure that withdrawal from the European Union is not "the end of an era", but "the beginning of a new age" for Britain. Mr Hammond's announcement extends for a further two years or more an earlier promise that the Treasury would guarantee funding for EU-backed deals signed by universities and businesses before next month's Autumn Statement.

The Treasury said that the promise would apply to all structural and investment funds, including agri-environment schemes, so long as they provide "strong" value for money and are in line with domestic strategic priorities.

The pledge is intended to give hundreds of businesses and universities the confidence to continue bidding for competitive EU funds while the UK remains a member.

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