UK Treasury chief warns Tory contenders on spending promises
LONDON (AP) — British Treasury chief Philip Hammond on Monday warned the two contenders to become the country’s next prime that their expensive spending promises will be impossible to deliver if the U.K. crashes out of the European Union without a deal.
Jeremy Hunt and Boris Johnson, who are competing for the Conservative Party leadership, have both vowed to use a fiscal cushion built up by the government to soften the economic blow from a potentially disruptive Brexit.
But Hammond said that unless Britain made an orderly exit from the EU, the government’s “fiscal firepower will all be needed to plug the hole a ‘no-deal’ Brexit will make in the public finances.”
Hunt and Johnson — Britain’s current foreign secretary and his immediate predecessor — are competing for the votes of about 160,000 Conservative Party members across Britain.
The winner, to be announced July 23, will replace Theresa May as party leader and prime minister.
Both are wooing the largely pro-Brexit Tory grassroots by promising to take Britain out of the EU — without a divorce deal if necessary — while also cutting taxes and boosting spending on public services and infrastructure projects.
Three years on from Britain’s 52%-48% vote to leave the EU, Britain’s departure has been delayed twice after Parliament rejected on three occasions the divorce terms May’s government agreed with the bloc.
Most economists say leaving without an agreement would severely disrupt trade between Britain and the EU, plunging the country into recession.