London-Coming months will be critical for British economy after situation returns normal and markets become stable.
This is what veteran politician and former Treasury Secretary Kenneth Clarke has foretold as he said: “the real economy is what matters and not the financial markets’ fluctuations, which usually are affected by any speculations or political changes.”
New Treasury Minister Philip Hammond reflected this fear and mentioned that he is planning to support the economy during its weakness after voting for Brexit; however, it is hard to specify the nature or size of this support now.
Hammond has promised to “reset” Britain’s tax and spending plans if the economy falters in the wake of Brexit.
Speaking at a meeting of business leaders in Beijing, the Chancellor told Sky News: “Over the medium term we will have the opportunity with our Autumn Statement to reset fiscal policy if we deem it necessary to do so in light of data in the coming months.”
Hammond said he will “reset fiscal policy” in the autumn statement later this year, once the government has a clearer picture of the UK economy after the Brexit vote.
“We are clear that we are going to support the economy over this period, so we can take advantage of the opportunities that the referendum gives us in the medium and long term.”
He said: “Of course we understand that the decision, particularly the unexpected nature of the (Brexit) decision, has caused some turbulence. However, we have the tools necessary; in the short term the Bank of England will use the monetary tools at their disposal.”
Hammond said the Purchasing Managers Index (PMI) shows that business sentiment has suffered from the Brexit vote.
“It tells us that confidence of people and businesses has been dented. They’re not sure; they’re in a position of uncertainty now.”
“Our job is to restore as much certainty as we can, as quickly as we can,” he said.
That means reaching agreements with European partners, and also striking deals with other countries such as China, the chancellor added.