By Akanshya Gurung
From the lack of progress in Brexit negotiations to accusations of stealing and watering down Labour policies, the Tories have faced much attack recently. And Philip Hammond, Chancellor of the Exchequer, is just the latest Conservative cabinet minister to come under scrutiny. This is following Theresa May’s disastrous conference party speech, and calls for Boris Johnson to resign as Foreign Secretary.
Hammond used his time at the Conservative Party conference in Manchester last week to criticise Corbyn and Labour’s economic policies. This is despite a fully costed Labour Party manifesto which seems to have some of its items, albeit diluted, borrowed within the new Conservative pledges. In a more concerning speech to CEOs at a corporate dinner during the conference, Hammond called on attendees to ‘combat the menace’ of Corbyn, framed as a threat to free market ideology. However, Adam Marshall, head of the British Chambers of Commerce said companies were running out of patience with the ‘division and disorganisation’ at the heart of government, while others at the dinner stated they would remain politically neutral, reported the Financial Times.
Chancellor Hammond at £400 a head dinner: these are chilling words for U.K. democracy – I will explain why… pic.twitter.com/bXA0B2vufe
— Paul Mason (@paulmasonnews) October 3, 2017
What Hammond failed to highlight was the Conservatives’ own dangerous handling of the economy. When Real Media spoke to Richard Murphy, Professor of International Political Economy at City University, before the election, he warned of the upcoming financial crisis; ‘Are we going to go into a serious financial crisis? Yes. When? Soon. How do I know? Debt is increasing. Individual debt is increasing. The number of bankruptcies is increasing. The number of County Court Judgements is increasing. Real wage rises are falling. The amount of credit available in the economy is reducing so people will not be able to make up the shortfall. We are therefore going to have an economic downturn. We’ve already suffered a fall in the exchange rate, investment is declining. We are in trouble. She [Theresa May] knows that. That’s what the real economy is doing.’
The Guardian’s Larry Elliot parallels a similar warning: ‘Britain’s debt timebomb is primed and ready to go off at any time…All that is required is for the fuse to be lit’.
The effects of Brexit, which is increasingly becoming Hard Brexit through pressure from a faction of the governing party, are already showing. The Office for Budget Responsibility (OBR) estimates a Brexit blow of around £15bn per annum to public finances by 2020-21. Similarly, the International Monetary Fund (IMF) predicts a 0.3 percentage reduction in UK growth, declining to 1.7 per cent for 2017— falling behind competing countries. This was ‘a direct consequence of leaving the EU.’
Further, money set aside by the Chancellor, who in one year has racked up more borrowing than any other Chancellor since records began, to smoothen the transition of leaving the EU stands at risk. The overestimation of growth in British productivity during the last seven years means that the budget was too optimistic. And the Financial Times reports that ‘as much as two-thirds of the £26bn of headroom in the public finances that the Chancellor created last year as a buffer for the economy through the Brexit period is likely to be wiped out’. There was a decline to 0.2 per cent against a forecasted (and desired!) 1.5 per cent growth. Thus, the OBR are now forced to publish further analysis reflecting on more realistic figures and the Bank of England grow with worry over the national economic debt. £145 billion of debt, to be exact.
Hammond’s saving grace may have been viewed by some as his consistent position as one of the ‘most moderate, collaborative participants’ in Brexit talks, but in an interview with Sky’s Ed Conway today, Hammond described the EU as the ‘enemy’, in a bid to get his dysfunctional party to unite. Sky described his comments as coming at a ‘fragile juncture’ for Brexit negotiations, and undermined the route to ‘clarity and stability’ which Hammond said businesses crave.
Hammond may have been moved to make the comments after calls were made yesterday to sack the Chancellor for failing to be ‘sufficiently supportive of Brexit’, amounting to being ‘very close to sabotage’ according to former Chancellor Nigel Lawson. It seems the divisions are unlikely to subside.
Meanwhile, the economics of the left are increasingly establishing their mainstream appeal, with the IMF now stating that ‘higher taxes for the rich will cut inequality without hitting growth’.
Shadow Chancellor John Mcdonnell told the FT; ‘The truth is our policies are just common sense, which many people in business and every walk of life agree with us on. This is what truly terrifies Phillip Hammond.’