UK Chancellor Philip Hammond on Tuesday faced growing pressure from Conservative Eurosceptics to be “optimistic” about Brexit and use his Budget to launch an ambitious programme of tax cuts and spending increases.
In a sign that Mr Hammond’s cautious approach is creating tensions with Theresa May, the prime minister’s former chief of staff Nick Timothy claimed the chancellor lacked “a burning desire to change people’s lives for the better”.
Mr Hammond has told colleagues he intends to stick to his fiscal rules and is determined to reassure markets that he has a grip on the public finances at a time of uncertainty about Brexit.
But some pro-Brexit Tory MPs believe Mr Hammond is excessively gloomy about Brexit and say a new chancellor is needed to embrace the opportunities afforded by the country’s departure from the EU.
Eurosceptic MP Jacob Rees-Mogg said Mr Hammond would have the scope for tax cuts and to increase spending on the NHS by £350m a week — a key promise of the Leave campaign — if he abandoned the “false assumptions” of official forecasts.
Meanwhile, Liam Fox’s trade department was criticised on Tuesday for issuing — and then deleting — a tweet endorsing a report claiming that a hard Brexit could give the UK a £135bn “windfall”.
The Department for International Trade tweeted a Daily Mail article which reported the apparent financial bonanza that Britain could expect if it left the European Union without a deal.
That research, by a group called Economists for Free Trade (EFT) — formerly known as Economists for Brexit — is at odds with models used by the Treasury, Office for Budget Responsibility and Bank of England.
The £135bn figure was first released in August by EFT, which is led by Patrick Minford, a professor at Cardiff University. The figure was reported again as Mr Rees-Mogg, an EFT adviser, launched a set of the group’s forecasts ahead of next week’s Budget.
To read the report in full, click here.