Philip Hammond moves to tackle Brexit economic shock

LONDON: Chancellor of the Exchequer Philip Hammond said the UK government is shelving its balanced-budget goal to allow “carefully targetted” investment to offset the economic shock that is forecast because of Brexit.

“Anecdotally we hear of businesses postponing investment decisions,” Hammond told BBC Radio 4’s “Today” programme on Monday at his Conservative Party’s annual conference in Birmingham, central England.

“If we don’t intervene to counteract that effect in time, that will have an effect on jobs.” Hammond cautioned that recent data, while showing economic strength, may not reflect the uncertainty businesses will feel once Britain actually starts the process of leaving the European Union.

Prime Minister Theresa May, who appointed Hammond to replace George Osborne in the aftermath of the June 23 referendum that propelled her to power, used her own speech to the conference on Sunday to say she will trigger the process of leaving the bloc before the end of March.

The pound fell after her remarks. In his first major speech since he became finance minister, Hammond confirmed to the party conference that he’s no longer seeking to achieve a fiscal surplus by the end of the decade, the central goal of Osborne’s fiscal strategy.

While he said that the deficit remains “unsustainable,” Hammond called for a “new plan” to manage the nation’s finances in a “pragmatic way”. “The markets have calmed since the referendum vote, and many of the recent data have been better than expected,” Hammond said.

“But there is no room for complacency. Many businesses which trade with the EU are uncertain about what lies ahead.”