Amid the Brexit chaos this week, you would have been forgiven for missing theChancellor’s Spring Statement. In ‘normal times’ this would have been the headline political act of the week, but as we are all so painfully aware, these are anything but normal times.
Hammond had previously stressed that the Spring Statement would not be a major fiscal event and indeed began by recognising that ‘the House has other pressing matters on its mind today’. Slimmed down and overshadowed it may have been, but irrelevant it was not.
Amidst Brexit, the UK economy cautiously continues to defy expectations, at least for now. After nine consecutive years of growth, we have another five forecast (albeit each below 2%), unemployment is as low as it has been since 1975 and for the first time since 2001-02 Britain will run a primary surplus.
This general optimism was the backdrop to Fiscal Phil’s statement last year that ‘The era of austerity is over.’ On Wednesday however, he rowed back on this pledge as Brexit took centre stage, stating that this would only be the case if a disorderly Brexit was avoided, meaning the Government would have an extra £26.6bn “Deal Dividend” to spend.
It has long been evident that Brexit has sucked financial and political capital from all other areas of public policy. The £3bn towards affordable housing and the raft of environmental policies announced could be seen as a recognition of the need to look beyond Brexit and towards the next general election. TheConservatives need to appeal to younger voters for whom such issues are of paramount importance and to build evidence of a domestic agenda. Just how long the PM and Chancellor can hang around for to implement this agenda remains to be seen though.