Former Chancellor Philip Hammond has accused the government of being “reckless about our economic future” because of its planned spending spree ahead of a possible no deal Brexit.
Day-to-day government spending is set to rise real terms by 4.1%, or £13.8bn, next year. The spending increase, announced last month, represents the largest rise in annual government spending in 15 years.
Hammond told BBC Radio 4’s Today Programme on Thursday: “The economy is slowing down and the Government has made a number of very significant spending commitments and I do worry that the Conservative Party’s core message for many, many years, whether people like us or loathe us, has been that we are a responsible party with the economy and the public finances.
“And I do worry about a strategy which is reckless about our economic future, in terms of advocating no-deal Brexit, and reckless about our public finances, in terms of spending money that, frankly, at this point in the Brexit negotiation, we cannot be sure we have available.”
The government’s planned increase in spending comes at a time when UK growth rates have slowed to a crawl, meaning slower growth in tax take for the exchequer. A no-deal Brexit, which looks increasingly likely, would also further dent growth and tax receipts.
Hammond’s warning comes days after the Institute for Fiscal Studies (IFS), in association with Citi and the Nuffield Foundation, predicted that a no-deal Brexit would push UK debt to its highest since the 1960s. Borrowing is likely to rise to £100bn ($122.9bn) and total debt would soar to 90% of national income, the IFS warned.
Brexiteers argue that trade deals struck after Brexit would help spur growth but Hammond said these deals would have “very limited” economic value to the UK, in a separate interview with the Daily Telegraph published on Thursday.
“We all know these trade . deals are of very limited potential value and likely to be very hard to negotiate without serious domestic economic and political consequences,” he told the paper.
Commentators have suggested that Boris Johnson’s public spending spree could be part of preparation for a possible early general election. Hammond said he did not support a fresh election to solve the Brexit quagmire.
“I don’t think an election solves our problem here,” he told the Today Programme. “I would not support an election at the moment.”
Hammond told the Telegraph the government should urge the EU to strike a quick zero-tariff trade deal, agreeing the text of the deal before the exit and then signing as soon as Britain leaves. Hammond believes this would do away with the need for a backstop.