From bunnies to Brexit – the government's fiscal events are about to get a lot more serious

Julian Harris
Follow Julian
No magic tricks here? Hammond is expected to be more measured than his predecessor
No magic tricks here? Hammond is expected to be more measured than his predecessor (Source: Getty)

Help to Buy, the National Living Wage, the New Isa, the Lifetime Isa, a tax on fizzy drinks – the list of George Osborne’s fiscal innovations was, until his departure from Downing Street, seemingly endless.

During his time as chancellor, Osborne was especially keen to pull at least one rabbit out of his metaphorical hat whenever he stepped up to the Despatch Box to deliver a Budget or Autumn Statement.

Today we will discover whether Osborne’s successor, Philip Hammond, plans on continuing this bombastic and micromanaging technique, or whether, as expected, he will take a more measured approach.

Read more: We asked economists what they want from Philip Hammond's Autumn Statement

Unlike both Osborne and the equally-spotlight-seeking Gordon Brown, Hammond is not believed to harbour an especially strong ambition to become Prime Minister, and is known in Whitehall for being fastidious yet pragmatic – a bit like an accountant, according to some.

Many Tory MPs believe he will tone down these so-called “fiscal events”, perhaps even downgrading or scrapping (from next year onwards) the Autumn Statement altogether.

If he wishes to do so, the time is right. While Osborne’s carefully-branded initiatives became headline news and made for high political drama, competition for attention has intensified in 2016. Hammond’s debut comes ahead of the UK’s most intense period of international negotiation for decades, following the (scheduled) triggering of Article 50 early next year.

Elsewhere in the EU troubles continue to simmer; nervous investors are keeping one eye on Italy’s constitutional referendum at the end of next week, and another on the continent’s fragile banking sector. Then there’s the small matter of an impending Donald Trump presidency.

Read more: Boris: MPs' hostility to Trump is against the UK's national interests

The government will almost certainly miss its deficit-reduction target for the current financial year, with the OBR – its fiscal watchdog – expected to reveal an extra £100bn in borrowing over the next five years thanks to a predicted slowdown in growth.

Forecasting political outcomes has proven to be a fool’s game this year, and second-guessing their economic impact is even harder. But one thing is clear – from Brexit to Trump, the Conservatives need to focus on the broader picture, and have little need for budgetary gimmicks.

Hammond can go down as a great chancellor without pulling any bunnies from the hat. He and the Prime Minister have bigger fish to fry.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles