Philip Hammond announces post-Brexit cut in Income Tax: Brexit News for Tuesday 30th October

Philip Hammond announces post-Brexit cut in Income Tax: Brexit News for Tuesday 30th October

Philip Hammond announces post-Brexit cut in Income Tax…

Philip Hammond has unveiled a post-Brexit tax cut for 32 million workers and declared that the era of austerity is “finally coming to an end” with a £100bn package of public spending over the next five years… He pledged to bring forward income tax cuts by a year to April 2019, a month after Brexit, in a move that will save higher rate taxpayers an average of £495 a year and basic rate taxpayers an average of £130. As revealed by The Daily Telegraph on Saturday, the personal allowance, the rate at which people begin paying income tax, will now rise to £12,500 in April next year while the threshold for the higher rate of income tax will rise to £50,000. – Telegraph (£)

…as he says Britain is set for a ‘double deal dividend’ if a Brexit agreement is reached with the EU…

Britain will enjoy a “double deal dividend” from striking a Brexit agreement, Philip Hammond said as he announced extra funding to prepare the UK for its departure from the European Union. The Chancellor said Britain’s economy would be strengthened by the “end of uncertainty” a deal would bring while an agreement would also free up money currently set aside to smooth a disorderly divorce. Mr Hammond used his Budget to unveil a raft of spending commitments but he signalled they would be contingent on the UK securing a good deal with Brussels. Downing Street had rebuked Mr Hammond on Monday morning and said spending commitments would be delivered regardless of a deal after the Chancellor made a similar suggestion on Sunday. But Mr Hammond made clear his position and put himself at odds with Number 10 as he delivered his set piece address to a packed House of Commons on Monday afternoon. – Telegraph (£)

  • Austerity to continue for five more years if Britain leaves EU with no deal, Philip Hammond warns – Independent
  • UK chancellor eyes Brexit boost — as long as there’s a deal – Politico

…while increasing the amount of cash allocated for Brexit preparations…

The cost of preparing Britain for Brexit will be at least £4.2 billion, Philip Hammond admitted yesterday, as he increased funding allocations to government departments. In his budget speech the chancellor said that the £3.7 billion already allocated to Whitehall for contingency planning would need to rise by another £500 million. He also implicitly warned that the cost would rise further if no deal had been agreed by the time of Brexit on March 29. While Mr Hammond did not say which departments would receive the cash, the lion’s share is expected to go to the business and environment departments and the Cabinet Office, which is co-ordinating Whitehall planning. Previous funding has gone mostly towards hiring policy staff to deal with the increased Brexit workload. However, the new money is expected to pay for private sector contractors who will create the new systems needed to replicate government functions that are carried out by the EU. – Telegraph (£)

  • Hammond increases spending on Brexit preparations by £500m – FT (£)

…and gives the fishing industry a post-Brexit boost

There were also announcements for key Scottish industries including whisky, oil and gas and fishing. A freeze on Spirits Duty will save 30p on a bottle of Scotch compared to the inflation assumption in the Office for Budget Responsibility’s forecast, the Chancellor said. The oil and gas industry will benefit from continuing support by retaining the headline tax rates at their current level, he added. A UK-wide £10 million Fisheries Technology Fund will also be set up to support the sector as the UK leaves the EU. – Press and Journal

Number Ten insist a no-deal Brexit won’t affect public sector spending…

Downing Street has rebuked the chancellor after he claimed that public sector spending increases to be announced today were contingent on a successful Brexit deal with the EU. Philip Hammond used pre-budget interviews yesterday to warn that the government would have to prioritise “fiscal measures to protect the economy” in the event of a no-deal Brexit. He added that the government would have to pursue a “different strategy” with a “new budget” to deal with the consequences of the disruption. Yet a No 10 spokesman dismissed the idea that budget spending commitments announced today could be withdrawn. “These spending commitments are funded irrespective of a deal,” he said. The health secretary had earlier told the BBC that an additional £20 billion pledged to the NHS over the next five years was guaranteed, regardless of the wider economic situation. “The extra £20 billion for the NHS is coming,” he said. “We’ll see it in the figures today and that is irrespective of the deal that we get on Brexit.” – The Times (£)

…although Cabinet minister Matt Hancock refuses to rule out tax rises to pay for £20bn NHS boost in the event of no deal

Matt Hancock has refused to rule out tax rises to pay for a £20bn cash injection for the NHS in the event of a no deal Brexit. Whilst the Health Secretary insisted that the additional long-term funding was guaranteed, he repeatedly declined to say whether taxes could be hiked if the public finances suffer from the UK crashing out the European Union without a deal… Asked about the risk to the NHS funding plan on Monday, Mr Hancock said that it was secured whatever the outcome of the Brexit negotiations, adding: “The extra £20 billion for the NHS is coming. We’ll see it in the figures today and that is irrespective of the deal that we get on Brexit,” he told BBC Radio 4’s Today programme.  – Telegraph (£)

Chris Grayling insists post-Brexit UK-EU flights will not be grounded

Transport Secretary Chris Grayling has insisted that flights between the UK and EU will not be grounded after Brexit despite admitting that talks on route access have not begun. He told a gathering of UK airport bosses that the “process is not in our hands”… The continuation of flights between the UK and the EU after Brexit will require either a fresh deal with the European Commission or bilateral agreements with individual countries. The UK aviation industry and Government has called for the liberal market to continue after Brexit. Speaking at the annual conference of trade body the Airport Operators Association in central London, Mr Grayling said: “I have had plenty of talks with both the Commission and other transport ministers… I haven’t met one single person either in the Commission or a member state who believes there will be an interruption to aviation.” – Mail Online

EU pledges access to UK clearing houses in no-deal Brexit

Brussels has responded to financial industry calls for continued access to London’s capital markets by providing reassurance that EU groups will temporarily be able to use crucial derivatives clearing services in the UK even after a no-deal Brexit. The commitment by Valdis Dombrovskis, European Commission vice-president, follows months of warnings by European bankers that EU companies otherwise face hefty rises in trading costs — or will be unable to hedge their market exposures. Brussels’ offer shows the importance regulators attach to avoiding any disruption to the operation of clearing houses, which have become a vital pillar of the financial system in the wake of the 2008 crisis. Mr Dombrovskis, who is responsible for financial regulation, told the Financial Times that the relief, which would allow EU banks and companies to continue using UK-based clearing houses to process derivatives trades if Brexit negotiations fail, would be strictly short term. It would also be linked to the UK’s willingness to stick close to EU regulatory and supervisory standards. – FT (£)

Angela Merkel sets date to quit after latest regional election drubbing

Angela Merkel will quit as chancellor and retire from German politics by 2021 in an unprecedented attempt to hand over power to a successor. Her long farewell, announced after her party suffered a slump in national polls and a drubbing in Sunday’s state election in Hesse, heralds a period of instability in Europe’s largest economy. Mrs Merkel, 64, plans to end her 18-year leadership of the Christian Democratic Union (CDU) at its party conference in December. She said yesterday that she would see out the remaining three years of her term as chancellor but would stand down in the event of a snap election, which could be as early as next year if her grand coalition falls apart. – The Times (£)

  • Angela Merkel says she will step down as Chancellor in 2021 after bruising regional elections – Telegraph (£)
  • German Chancellor is now a ‘lame duck’ after shock announcement – Express
  • Merkel’s twilight heralds German turmoil – Politico
  • Could Merkel replace Juncker to complete German domination of Europe? – Express
  • As populism replaces pragmatism, Angela Merkel exits the political stage – Owen Bennett for City A.M.

Julia Hartley-Brewer: A new 50p coin to commemorate Brexit? Make it £1 to show that you mean it Mr Chancellor

Chancellors have long been known to keep one last trick up their sleeves on Budget Day so that, at the end of a long, turgid speech, they can pull a rabbit from the hat with a flourish and bask in the glory of cheering backbenchers. But not Philip Hammond. Instead of rabbits from hats, the Chancellor turned to another old magicians’ favourite, and used his sleight of hand to make a coin magically disappear. He was expected to announce that a special commemorative 50p piece is to be minted to mark the “historic moment” of Brexit, engraved with the date 29 March 2019 and bearing the motto: “Friendship with all nations”. In the end, the Chancellor was apparently too embarrassed to mention the shiny new coin. It was left to enthusiastic Brexiteers to excitedly herald the news on social media. Perhaps it’s not so surprising. Mr Hammond, after all, is the Treasury’s Remoaner-in-chief, battling daily to keep the UK as closely entwined with the EU as he can. Small wonder he felt awkward about a new 50p that will be welcomed by many Brexiteers as reassuring confirmation that Brexit will one day finally happen – while simultaneously irritating the minority of Remain voters still battling to overturn the referendum result (which, let’s be honest, is why we wanted a Brexit coin all along). –  Julia Hartley-Brewer for the Telegraph (£)

Telegraph: A pragmatic Budget eclipsed by Brexit

There was almost a pre-election feel to the Budget, the first to be held on a Monday since Selwyn Lloyd delivered his in April 1962, just a few months before he was sacked in the so-called Night of the Long Knives. Philip Hammond will hope to avoid a similar fate, though if anything, politics today are even more febrile than they were in the latter months of the Macmillan administration nearly 60 years ago. Brexit, and the possibility of the UK leaving the EU without an agreed withdrawal deal, continues to consume Government thinking. The Budget was billed as the last before we leave the EU on March 29, but if there is no deal another may well be required in the spring, as the Chancellor conceded, to cope with the short-term financial consequences. Moreover, given the political impact of a failure to strike a deal, it is conceivable that Mr Hammond might not be delivering it. Much of what the Chancellor had to say had already been leaked or pre-announced, not least by the Prime Minister. Mr Hammond betrayed some exasperation at not being able to conjure a rabbit from the Exchequer hat but, even so, the scale of the fiscal stimulus he announced was still arresting. Revised borrowing figures from the Office for Budget Responsibility meant he had £13 billion more than anticipated to work with, and he spent much 
of it. – Telegraph (£) editorial

Richard Littlejohn: Don’t be fooled by gimmicks – Spread Fear Phil is still here and determined as ever to keep us under the yoke of the EU

Back in 1947, the then Chancellor of the Exchequer Hugh Dalton was forced to resign after leaking details of his Budget to a journalist called John Carvel. Some of his tax changes, including a penny on a pint of beer, appeared in later editions of the long-since defunct London evening newspaper, The Star, while Dalton was still on his hind legs in the Commons. His fellow MPs were outraged at this shocking breach of Parliamentary protocol, even though there was no evidence that early disclosure had any effect on the price of fish, let alone the stock market. Nevertheless, Dalton was obliged to fall on his sword. Three decades later, I found myself working on London’s Evening Standard, alongside — some rungs below, actually — Carvel’s son Robert, the Standard’s political editor. One of the big set-piece events of Bob Carvel’s year, for which he would fortify himself with a can or two of Carlsberg Special Brew, was Budget Day. By then, although Chancellors were supposed to spend the preceding weeks in so-called ‘purdah’, selected political editors were spoon-fed a few crucial morsels on the understanding that they weren’t published in advance of the Budget speech. Richard Littlejohn for the Daily Mail

Rob Jonkman: Local government must retain good European relations after Brexit

In the Netherlands, a large majority of our politicians and citizens are sad to see the UK leave the EU. That said, we accept that it is happening and we are keen to ensure that our local cooperation and our business and trade relations continue. Our local, regional and national impact assessments all underline our desire to continue working closely. In their report, the Dutch parliament, stressed for example that “any restriction on free trade with Britain would inevitably be at the cost of Dutch exports, prosperity and employment.” Within the EU, the Netherlands ranks second after Germany as the country exporting the most to the UK. The Dutch Parliament also added that “there’s no reason at all to allow Britain to cherry pick…but there’s also no reason to prevent Britain from receiving trade advantages.” Rob Jonkman for ConservativeHome

 

Brexit in Brief

  • Bad jokes, not much Brexit and just enough politics – a job well done for Fiscal Phil – Andrew Lilico for CapX
  • Would the EU welcome back Britain? Er… no – Iain Martin for Reaction
  • The unseen benefits of leaving the European Union – Madeline Grant for CapX
  • Andrew Neil warns EU transition period ‘extended to 2021’ in Truss clash – Express
  • German business condemns the EU game of chicken – Campaign for an Independent Britain
  • EU expert claims UK will Remain in EU after March 2019 – Express

And finally… TV star Chris Tarrant explains why he’s changed his mind on Brexit

“I voted to Remain, and two years on I’m now a staunch Brexiteer. Why? I’m so utterly sickened by the European elite creaming it off on a Blatter scale. I think the sooner we get out, the better. We will survive and carry on very nicely because we’re British. I’ve been appalled by the way they’ve treated us. All this stuff about: we’re going to teach you a lesson.” – Chris Tarrant interviewed in the The Guardian