Before every Budget, George Osborne would tell his aides to prepare for it as if it were their last. His thinking was that chancellors only have so many opportunities to tilt the country in the direction they want it to go. Osborne’s Budget record was far from perfect, but that mindset did at least mean that he achieved some lasting change.
Philip Hammond is approaching this month’s Budget differently. Unlike Osborne or Gordon Brown, he is not a political strategist, and it shows. The Treasury is treating this month’s Budget like a holding exercise.
To be fair to Hammond, one of the reasons the Treasury is taking such a cautious approach is because of the uncertainty around Brexit. Until it becomes clear whether or not there will be a deal, how can a chancellor be expected to lay out what the economy needs? Hammond believes that if the UK and EU reach an agreement, there will be a deal dividend. The easing of the uncertainty around Britain’s future will lead to an uptick in business investment. Whereas if there is no deal, stimulus will be needed to help avoid a recession.
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The next week will be a difficult period for the government. There is no sign yet of a mutually acceptable answer to the issue of the Irish backstop, and one must be found for a withdrawal agreement to be reached. The UK had been trying to leave open the possibility of setting up regulatory checks in the Irish Sea. But the DUP, upon whom May relies for her parliamentary majority, is trying to shut that option down.
Some in government believe that she must call the DUP’s bluff. They argue that the Unionists will never risk putting Jeremy Corbyn, a man who favours a united Ireland and was deeply sympathetic to the IRA, into Downing Street.
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