London: Britain’s new finance minister Philip Hammond today ruled out an emergency budget in response to economic turbulence triggered by the country’s vote in favour of exiting the European Union. Hammond told media that a budget would be submitted towards the end of the year, as planned by his predecessor George Osborne following a U-turn.
Ahead of last month’s referendum on Britain’s EU membership, Osborne had suggested that an emergency budget would be required in the event of a Brexit vote. However, he quickly ruled out such an event despite the country voting to quit the bloc.
Britain’s new Prime Minister Theresa May yesterday appointed Hammond to replace Osborne as Chancellor of the Exchequer. Osborne was the architect of the past six years of British austerity and a close friend of former Prime Minister David Cameron, while both had campaigned for Britain to remain in the EU.
Hammond told various media outlets today that there would be no emergency budget. “The (new) Prime Minister made clear we will do an Autumn Statement (budget) in the usual way, in the autumn, and we will look carefully over the summer at the situation,” Hammond told Sky News.
Speaking to the ITV channel, he said that financial markets “need to know we will do whatever is necessary to keep the economy on track”. Hammond added that he was meeting today with Bank of England governor Mark Carney to assess Britain’s economic situation.
It comes as the BoE prepares to announce whether it will cut its main interest rate to a new record low level under 0.50 per cent to curb the economic fallout from Brexit.
Since the referendum result, the pound has slumped to a 31-year-low against the dollar, before rebounding slightly. While a weak pound helps exporters, it makes imports more expensive, which in turn can push up inflation.
But while a cut to the BoE’s interest rate may help to boost economic growth, it risks further weakening the pound according to analysts. Hammond had been the foreign minister in the outgoing government of Cameron since 2014, while Osborne has quit the government after his successor’s appointment.