No-deal Brexit may prolong UK austerity, says Hammond

London: The UK will need new tax and spending plans and may have to extend austerity policies if it fails to secure a deal with the European Union, Chancellor of the Exchequer Philip Hammond said.

With analysis last week showing a no-deal Brexit would drag the economy to a near-standstill next year, in that scenario “we’d need to have a new budget that set out a different strategy for the future,” Hammond said.

“We would take appropriate fiscal measures to protect the economy, to prepare us for the future and to strike out in a new direction that would ensure that Britain was able to succeed whatever the circumstances we found ourselves in,” he told Sky News’s “Ridge on Sunday” on the eve of his annual budget speech.


The Bank of England may also need to take action, potentially through a change in interest rates, he said.

Hammond is facing pressure to end almost a decade of spending cuts that have limited public services and spurred support for the opposition Labour Party and its socialist leader, Jeremy Corbyn.