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UK finance minister says no-deal Brexit could prolong austerity

UK finance minister says no-deal Brexit could prolong austerity

Phillip Hammond stated that 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 EU

With analysis last week showing that a no-deal Brexit would drag the UK economy to a near-standstill in 2019, Hammond stated that “we’d need to have a new budget that set out a different strategy for the future,” in case such a scenario comes to pass.

“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.

He also stated that the Bank of England may also need to take action, potentially through changing interest rates.

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

Labour, which is neck-and-neck in the polls with the Conservatives, said Britain must spend more than £100bn ($128bn) on public services to reverse the impact of a decade of austerity. The party’s finance spokesman, John McDonnell, stated that Hammoned appeared to want a no-deal Brexit and accused him of “complacency” over talks with the EU.

 “He’s gone back on what he said. He seems to have accepted a no deal-Brexit and he does want us to be like Singapore, a sort of tax haven which would undermine our manufacturing base,” he stated to Sky news.

UK prime minister Theresa May had directed Hammond to find an extra £20bn ($25bn) a year for the National Health Service, and she declared an “end to austerity” in her party conference speech earlier this month.

Hammond will pledge the additional money for adult social care and the armed forces, according to the Mail on Sunday. He’ll also announce at least £250mn ($320mn) in funding to anchor and extend fiber networks from schools, libraries and other state-owned property, stated the Sunday Telegraph.

 

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