In his first and last Autumn Statement, ‘Spreadsheet Phil’ lived up to his reputation, avoiding any gimmicks, or Trump-esque spending plans, but nevertheless found spending equivalent to 0.4% of GDP, focused on a series of targeted measures designed to boost and rebalance the UK economy.
Chancellor Hammond had a fine line to tread: He couldn’t afford to echo Trump’s ‘devil may care’ approach to bond markets; needing to ensure that the UK’s not inconsiderable borrowing costs remained low. He just about managed this: The UK 10 year government bond ticked up from 1.36% to 1.45% in the 24-hours following his announcements, but sterling remained relatively steady and equity markets were un-phased (and possibly more concerned with events across the pond).
He has been accused of simply delivering ‘more of the same’, from the Cameron administration. Admittedly, he did not embrace Osborne’s showmanship, condemning all rabbits to remain firmly in their hats, but there is a reasonable question over whether he should have done more. Should he, for example, have embraced a little more Trump-style fiscal chutzpah?
It is not his style, and for the time being, it is reasonable to conclude that the UK doesn’t need it. Although Brexit looks likely to blow a £58bn hole in the public finances, the UK economy is not yet in obviously bad shape. To date, it has defied the naysayers, both in the wake of the Global Financial Crisis and in the wake of the Brexit vote. Recession does not appear to be looming and the weakness of sterling is cushioning the blow.
Although Brexit looks likely to blow a £58bn hole in the public finances, the UK economy is not yet in obviously bad shape
That is not to say the country is without its structural problems. Chancellor Hammond used his limited flexibility to try and address some of the problems of productivity, assigning money for digital infrastructure and National Productivity Investment Fund, which will spend on housing, transport, telecoms and R&D. Housing was also a priority, with new money allocated to house building initiatives.
Ultimately, it was a steady statement that avoided a lot of change or needless tinkering at a time when there is already a lot of unsettling change. Chancellor Hammond’s greatest success may yet prove to be reassuring the world that Britain is not in crisis, but merely having a bit of a re-think.