-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Global Macro Weekly -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessMNI: PBOC Net Injects CNY13.8 Bln via OMO Monday
MNI BRIEF: PBOC Increases Gold Reserves
MNI BRIEF: Japan Q3 GDP Revised Up On Net Exports, Capex
MNI ASIA OPEN: Nov Job Gains, Fed Blackout, CPI/PPI Ahead
MNI ANALYSIS: UK Hammond Avoiding No-Deal Brexit Budget Spend
--Hammond Seeks Spending Delay Related To No Deal With Finances Under Pressure
By Kieran Williams and David Robinson
LONDON (MNI) - UK Chancellor Philip Hammond is aiming to delay public
spending on preparations for a no-deal Brexit for as long as possible, which
will keep it out of the upcoming Budget's arithmetic.
Hammond said on Wednesday in front of the Treasury Select Committee that
his article published earlier on Wednesday in The Times, which was portrayed as
him refusing to sanction spending on a Brexit no deal, had been misunderstood.
He said would not be allocating money in advance just to make a point.
Critics have said the EU needed to be convinced the UK was prepared to go
for no deal but Hammond said "the EU knows that we mean business."
"Where it [spending] is uniquely required in a 'no deal' scenario we need to
work backwards from 30 March 2019 and identify where we need to make the
commitment decision in order to deliver on time, but not commit public funds on
a potentially abortive basis before we need to do so," Hammond said.
The government's intention is to leave allocation of preparatory funds for
a Brexit 'no deal' as late a possible in order to not waste "precious public
money," in Hammond's words.
Any commitments to spending would be factored into the fiscal arithmetic by
the Office for Budget Responsibility in the November 22 Budget, which would add
to the problems Hammond faces meeting his fiscal goals with the OBR having
already pre-announced a likely sizeable cut to its estimate of potential
productivity.
"The key issue is making sure that we are ready with a minimum effective
solution on day one after we leave the European Union," said Hammond, "but
making sure that we don't start committing substantial amount of funds any
earlier than we need to, in the hope that a 'no deal' scenario will be something
we don't have to plan for."
When pressed Hammond said that "any earlier we need to" meant there would
be a rolling programme and that some areas would need to start spending money in
the New Year to move towards a transitional agreement. Such spending, however,
could be met from contingency reserves, avoiding a hit to borrowing projections
Hammond repeatedly avoided questions around what he thought that the final
Brexit deal would look like, saying that the government needed to plan for a
wide range of scenarios.
These included the possibility of a hostile 'no deal' scenario where
"people are not necessarily acting in their own self economic interest."
Hammond acknowledged that not everything would be in place for day one, at
end March 2019, but said that the government had made a commitment to operate
with the minimal economic infrastructure necessary.
After Prime Minister Theresa May ran into criticism this week for refusing
to say whether she would vote to remain or leave the EU if the referendum was
held now, Hammond, who campaigned to remain, was wary when asked if the UK could
end up better-off outside the EU as a result of trade deals with non-EU
countries.
He said that the best case scenario would be a "patch" that afforded the UK the
same deals with non-EU countries that it has under the existing EU framework and
comprehensive deal could be negotiated in "the fullness of time."
Hammond noted that lengthy supply chains and the ambiguous nature of future
cooperation between EU and UK customs authorities made it a difficult question
to answer, but said in the best case scenario, "many, most of the benefits of
being in the current customs union (would) still (be) available to our
businesses in a streamlined customs agreement."
In a final concession Hammond said "if you are asking me if I can see a
scenario of an agreement with the EU that so facilitates movement across the
border that the additional costs imposed are less than the benefits of being
able to negotiate trade agreements with third parties, yes I can."
In what seemed a bid to temper any perceived optimism, Hammond said that any
downside of trade frictions would be immediate, but any benefits would take time
to manifest and then further time would be required for UK businesses to take
advantage.
The OBR, like the Bank of England, will model the impact of Brexit as a
negative. The assumption is that the UK moves, at least in the near-term, to a
less open trading environment.
Small wonder given the challenges already facing the UK public finances,
with debt-to-GDP already just over 80%, that Hammond is keen not to add to
spending commitments.
--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com
--MNI London Bureau; +44 203 865 3809; email: kieran.williams@marketnews.com
[TOPICS: M$B$$$,M$E$$$,MFB$$$,MGB$$$]
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.