No emergency budget despite chilling effect of Brexit, says Chancellor Hammond

The vote to quit the European Union has had a chilling effect on the British economy but there will be no emergency budget, the new Chancellor said.

File photo dated 13/07/16 of Philip Hammond, who has risen to some of the highest offices in Government while leaving little trace in the public imagination. PRESS ASSOCIATION Photo. Issue date: Thursday July 14, 2016. His reputation - within Westminster at least - has been as a highly articulate and effective "safe pair of hands" who can plough a steady course without causing drama, upset or excitement. See PA story POLITICS Conservatives Hammond. Photo credit should read: Steve Parsons/PA Wire

Philip Hammond said the referendum result caused an economic “shock” and did not rule out the possibility of an economic slowdown.

But the new Government will do “whatever is necessary to keep the economy on track” and the pace of deficit reduction could be curbed, he suggested.

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Mr Hammond told BBC Radio 4’s Today programme: “We will face some challenges in the short term in managing the economy. It has had a shock as a result of the decision on June 23 to leave the European Union.

“That has shaken confidence, it has caused many businesses to pause investment decisions that they were making.

“The challenge for us now is to send signals of reassurance about the future as quickly and as powerfully as we can to the international investment community, to British business and to British consumers so we can get those decisions starting to be made and investments starting to flow into the UK.”

Mr Hammond said that investment, job creation and business confidence had all been hit since the referendum result.

“There has been a chilling effect. We have seen an effect in markets, we have seen business investment decisions being paused because businesses now want to take stock, want to understand how we will take forward our renegotiation with the EU, what our aspirations are for the future trading relationship between Britain and the European Union.”

Mr Hammond will use his first morning in the job to meet Bank of England governor Mark Carney.

When pressed on whether he still believed in deficit reduction, he said the economy was “entering a new phase”.

“Our economy will change as we go forward in the future and it will require a different set of parameters to measure success,” he told Today.

“Of course we have got to reduce the deficit further but looking at how and when and at what pace we do that and how we measure our progress in doing that is something that we now need to consider in light of the new circumstances that the economy is facing.”

Asked whether he expected a post-referendum recession, Mr Hammond told Sky News: “I will today have a series of meetings with the key economic leaders, starting with the governor of the Bank of England this morning, so that’s an assessment I will want to make for myself over the coming hours.”

He added: “The number one challenge is to stabilise the economy, send signals of confidence about the future, the plans we have for the future, to the markets, to businesses, to international investors.

“Britain is open for business. We are not turning our back on the world. We are determined to maintain our outward-looking stance and we are determined to maintain the prosperity of our people and keep on growing the economy and creating jobs in the future, and that’s the message I want to get out there today.

“We will do whatever we need to do to restore that confidence and to keep Britain as an attractive destination for businesses to invest and create jobs.”

Mr Hammond told ITV’s Good Morning Britain that the markets “need signals of reassurance”.

“There is no plan for an emergency budget, as Theresa May made clear. There will be an Autumn Statement in the normal way and then there will be a Budget in the normal way, he said.

“But the markets do need signals of reassurance, they need to know we will do whatever is necessary to keep the economy on track.”

Theresa May will continue to appoint her government team after her first night as Prime Minister saw a flurry of appointments to the top jobs in the Cabinet.

The appointment of leading Brexit campaigner and former leadership rival Boris Johnson as Foreign Secretary shocked Westminster.

Asked about the former London mayor’s new role, which means he is in charge of MI6, Mr Hammond told Today: “The Cabinet works collectively and we have got a range of different characters and a range of different styles and a range of different talents.

“The lead and the tone will be set by the Prime Minister.”

Mr Hammond said the Foreign Office, Treasury and Home Office were “well oiled machines” with “highly skilled and competent” civil servants to support new ministers.