World Economy

Hammond Says Brexit Rattled Financial Markets

Hammond Says Brexit Rattled Financial MarketsHammond Says Brexit Rattled Financial Markets

The new Chancellor of the Exchequer Philip Hammond has said the UK’s vote to leave the European Union has “rattled” financial markets.

He added the UK would face “challenges” in managing the economy, because it had suffered a “shock” as a result of the Brexit vote, BBC reported.

The decision had caused companies to put plans on hold, he noted. The challenge was to send “signals of reassurance” to kick-start investment and spending decisions.

The former foreign secretary added he did not anticipate the need for an emergency budget as a result of the Brexit vote.

Hammond said the outcome of the referendum had surprised the markets and business. However, he said the fact that the conservatives had “moved quickly” to elect a new leader would help to restore confidence.

In a BBC interview, it was put to Hammond that he had been an integral part of “Project Fear” ahead of the EU referendum, warning of the economic dangers of leaving. “There has been a chilling effect,” he said.

  Taking Stock

“We’ve seen an effect in markets, we’ve seen business investment decisions being paused because businesses now want to take stock, want to understand how we will take forward our renegotiations with the European Union, what our aspirations are for the future trading relationship between Britain and the European Union.

“But what we’ve done over the last couple of weeks is move with significant speed to put in place a new government, which can start to deliver that certainty about the future.”

Hammond refused to be drawn on his fiscal plans. He said he would be meeting the governor of the Bank of England, Mark Carney, and other experts and leading players in the economy “to take stock”.

However, he said: “My initial judgment is that the immediate impact on the economy has come from business pausing decisions that they otherwise would have taken, investment decisions.”

“And I think the most urgent thing that we need to do is send a signal to business about our intentions, our pragmatic approach to taking this agenda forward now, so that as we leave the European Union, we do so in a way that protects the British economy and ensures that Britain will remain an attractive destination for investments coming here from overseas, maintaining that flow of investment which has been creating the two and a half million jobs that we’ve created in this country since 2010.”

Hammond acknowledged that there would be a challenging job to steer the economy: “It has had a shock as a result of the decision on the June 23 to leave the European Union. That has shaken confidence, it has caused many businesses to pause investment decisions that they were making.

He was also asked about the UK’s forthcoming negotiations to leave the EU. He has previously said it could take up to six years to ratify an agreement.

The important point was not how long it would take to ratify the agreement, but how long it would take to get an agreement on the principle terms of the exit deal, he said.