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UK FinMin sounds warning bells over possible $90 bn loss in no-deal Brexit

Hammond also pushed back against proposed tax cuts and spending increases by the two candidates -- ex-London mayor Boris Johnson and foreign minister Jeremy Hunt -- vying to become the next PM

AFP | PTI  |  London 

Philip Hammond
Philip Hammond

British Finance Minister warned on Tuesday that a disorderly UK departure from the European Union could result in a 90 billion pounds ($114 billion, 100 billion euros) "hit" to the treasury.

"The government's analysis suggests that in a disruptive no-deal exit, there would a be a hit to the exchequer of about 90 billion pounds," he told a committee of MPs.

"That will also have to be factored in to future spending and tax decisions." Hammond also pushed back against proposed tax cuts and spending increases by the two candidates -- ex-London mayor and foreign minister Jeremy Hunt -- vying to become the next prime minister.

He said tens of billions of pounds put aside to deal with a no-deal Brexit should not be earmarked for other purposes, after the pair outlined their plans to reduce taxes and raise public spending.

Hammond's comments also follow both contenders to replace outgoing premier Theresa May repeatedly warning they would be willing to take Britain out of the EU without an agreement at the latest delayed deadline of October 31.

"We've built up around 26-27 billion pounds of fiscal headroom, and the purpose of having that headroom is precisely to protect the UK economy from the immediate effects of a possible no-deal exit," he added.

"I have no doubt whatsoever that in a no-deal exit we would need all of that money and more to respond to the immediate impacts of the disruption.That would mean that there is no money available for... either tax cuts or spending increases." Hammond, who is almost certain to leave his post after a new Conservative leader and prime minister is selected by party members this month, hinted he may work to block a no-deal Brexit in parliament.

"It would be wrong for a British government to seek to pursue no deal as a policy," he said.

"I believe that it will be for the House of Commons, of which I will continue proudly to be a member, to ensure that that doesn't happen."

First Published: Tue, July 02 2019. 20:10 IST
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