Hammond s Brexit deal dividend not credible, MPs say
|bbc.com 12 Feb 2019 at 06:46|
Committee chair Nicky Morgan said Chancellor of the Exchequer Philip Hammond had said that in the event of a deal being struck there would be a "boost from the end of uncertainty, and a boost from releasing some of the fiscal headroom that I am holding in reserve at the moment".
However, MPs pointed out that the Office for Budget Responsibility (OBR) had previously said it was "odd" to refer to this as a dividend.
"The OBR already assumes an orderly Brexit, so there won t be a deal dividend beyond the forecast just by avoiding no-deal," added Ms Morgan.
"Business confidence may improve with increased certainty, but it s not credible to describe this as a dividend."
Following the release of the latest GDP figures on Monday, Mr Hammond told the BBC that the Bank of England had confirmed that there was "upside to come for the UK economy, if we get a good deal which allows us to leave the European Union in good order, in a smooth fashion, business investment will kick back in and we will see a benefit for the UK economy later this year".
And he dismissed the idea that it was unrealistic to talk about a deal dividend.
"I think if we get the right deal consumers will feel more confident and as consumers recover their confidence businesses will feel more confident."
The government has also said it is aiming to return the public finances to balance "at the earliest possible date" in the next Parliament.
But the Treasury Committee said Mr Hammond "could have achieved balance by 2023-24 in the Budget without further fiscal tightening, but instead he chose to spend more, largely through increased funding for the NHS".
"It is clear that the fiscal objective now has no credibility, so it cannot be used by Parliament to hold government to account.
"It should be replaced before the next Budget with something that accurately reflects government policy and priorities, which clearly do not include running a budget surplus," the committee added.