No emergency budget over Brexit ‘chill’ says Hammond

New Chancellor Philip Hammond
New Chancellor Philip Hammond

The vote to quit the European Union has had a chilling effect on the British economy but there will be no emergency budget, Chancellor Philip Hammond has said.

Speaking on his first full day at the Treasury after being appointed as George Osborne’s replacement on Wednesday, Mr Hammond said the referendum result caused an economic “shock” and did not rule out the possibility of an economic slowdown.

But the new Government will do “whatever is necessary to keep the economy on track” and the pace of deficit reduction could be curbed, he suggested.

Mr Hammond told the BBC Radio 4 Today programme: “We will face some challenges in the short term in managing the economy. It has had a shock as a result of the decision on June 23 to leave the European Union.

“That has shaken confidence, it has caused many businesses to pause investment decisions that they were making.

“The challenge for us now is to send signals of reassurance about the future as quickly and as powerfully as we can to the international investment community, to British business and to British consumers so we can get those decisions starting to be made and investments starting to flow into the UK.”

Mr Hammond said that investment, job creation and business confidence had all been hit since the referendum result.

“There has been a chilling effect. We have seen an effect in markets, we have seen business investment decisions being paused because businesses now want to take stock, want to understand how we will take forward our renegotiation with the EU, what our aspirations are for the future trading relationship between Britain and the European Union.”

Mr Hammond used his first morning in the job to meet Bank of England governor Mark Carney.

When pressed on whether he still believed in deficit reduction, he said the economy was “entering a new phase”.

“Our economy will change as we go forward in the future and it will require a different set of parameters to measure success,” he said.