Today’s Spring Statement will be an exercise in resisting temptation.
Recent news of better-than-expected tax receipts has led to a chorus of MPs, from across the political spectrum, calling for more public spending and “an end to austerity”. Whether it's investing in infrastructure or lifting the public sector pay cap, putting more into the NHS or the defence budget, there is no end to the list of ideas for how the chancellor should spend this windfall.
But despite the good news, some caution is necessary. This is a notably uncertain time for the global economy, on which the prosperity of the UK – and of London in particular – rests.
Read more: Philip Hammond signals an end to austerity
Donald Trump is ploughing ahead with his tariffs on steel and aluminium, and the threats of retaliation by the EU and China have increased the risk of a global trade war beyond this sector.
Meanwhile, Brussels seems determined to play dangerous games with UK-EU trade relations, with council president Donald Tusk vocally ruling out a deal on financial services last week.
British businesses still lack clarity on a host of Brexit-related issues – from work visas to regulations to supply-chain queries. Despite the government’s propensity to drag its feet, individual firms and industries as a whole have been moving forward and planning for their own futures outside the EU. To burden them now with a raft of tax and regulatory changes risks destabilising them at a crucial time.
In addition, the productivity growth trend is still weak, and the impacts of the gig economy and the changing labour landscape have yet to be fully factored into economic models. And if we have learnt one thing since the EU referendum, it is that economic forecasts are notoriously difficult to get right.
Against such a backdrop of uncertainty, a gimmicky Spring Statement full of unexpected rabbit-out-of-hat policies (think the Living Wage, fizzy drinks tax, and Help-to-Buy) could be a disaster.
George Osborne and Gordon Brown were both prone to showing off at the dispatch box, using their Budgets and Autumn Statements as an opportunity to grab headlines. But unlike his immediate predecessors, Hammond is not gunning for the keys to Number 10, so his fiscal announcements do not have to be audition pieces.
He should use his “Spreadsheet Phil” reputation to his advantage today, and deliver a Spring Statement that is remarkable in its unremarkability.