Tory leadership rivals told no extra cash for pledges in event of no-deal Brexit
Philip Hammond issued the warning to the Tory leadership contenders.
Boris Johnson and Jeremy Hunt have been warned by the Chancellor that there will be no extra cash to meet their spending pledges in the event of a no-deal Brexit.
Philip Hammond told the Tory leadership contenders that the “fiscal firepower” that has been stocked up will be needed entirely to counteract the effects of departing without a deal.
The “fiscal firepower” we have built up in case of a No-Deal Brexit will only be available for extra spending if we leave with an orderly transition. If not, it will all be needed to plug the hole a No Deal Brexit will make in the public finances.— Philip Hammond (@PhilipHammondUK) July 1, 2019
Both candidates have made costly pledges as they vie to replace Theresa May as prime minister.
Writing on Twitter on Monday, Mr Hammond said: “The ‘fiscal firepower’ we have built up in case of a no-deal Brexit will only be available for extra spending if we leave with an orderly transition.
“If not, it will all be needed to plug the hole a no-deal Brexit will make in the public finances.”
Foreign Secretary Mr Hunt and frontrunner Mr Johnson both say they are prepared to take the UK out of the EU without a deal.
Mr Johnson has taken a more hardline approach, saying the exit must happen by the Halloween deadline “do or die”, but Mr Hunt said he would ask for a delay if a deal was in sight.
Mr Hammond’s warning came as Mr Hunt announced a £6 billion war chest to handle a no-deal Brexit.
The Foreign Secretary said he would launch a three-week blitz to cut a new deal with the EU if he wins the Tory crown.
Mr Hunt said he would cancel August leave for civil servants involved in Brexit preparations if necessary.
He said he would decide by September 30 whether to continue with Brexit talks with Brussels or concentrate on a no-deal withdrawal from the EU.
The Cabinet minister told a gathering in Westminster: “We have built up headroom – around £26 billion of headroom – which makes it possible to make the commitments I’m making today.”
He added: “It is important that the EU knows that we will do what it takes to make a success of a no-deal Brexit.
“We won’t blink as a country.
“That no-deal Brexit is not going to be an opportunity for them to successfully turn the screws on our country.
“I will start engaging with the EU straight away, throughout August.
“Then, when we have published our plan for a deal we think we can get through Parliament by the end of August, we will start formal negotiations in September.
“There is a hard deadline in what I have said; by the end of September, I, as prime minister, will make a judgment as to whether there is a realistic prospect of a deal that can get through Parliament in the short term.
“And if my judgment is that is not the case, talks will stop and we will put our heads down and focus on no-deal.”
Mr Hunt also pledged cuts to corporation tax at an estimated cost of £13 billion per year in the short term and an increase in defence spending to cost an additional £15 billion in four years.
Mr Johnson has signalled that he would be prepared to increase borrowing to fund infrastructure projects.
He has also pledged to give a tax cut to people earning more than £50,000 a year, a move which was criticised as benefiting the top 10% of earners and costing a suggested £9 billion.