national budget – even though there are questions marks hanging over the
economy following the country’s decision to leave the European Union.
Philip
Hammond, one of Prime Minister Theresa May’s first appointments,
offered calming tones of reassurance to the markets and the general
public in a series of interviews after taking office. The media blitz
suggests that one of the new government’s first priorities is to counter
worries that the economy will slip into recession amid a softening of
consumer and business confidence.
“The number one challenge is to
stabilize the economy, send signals of confidence about the future, the
plans we have for the future, to the markets, to businesses, to
international investors,” Hammond told Sky News.
“Britain is open for business. We are not turning our back on the world.”
Hammond will meet with the head of the Bank of England, Mark Carney, on July 14 to “assess where we are.”
The
comments come ahead of a decision by the central bank’s Monetary Policy
Committee on whether to stimulate the economy. Carney has already
indicated that some sort of stimulus will be offered during the summer
months as his pre-vote warnings about the impact on the economy had
begun to crystallize.
One course would involve a reduction in the
bank’s benchmark interest rate from the current record low of 0.5
percent, where it has stood since the depths of the financial crisis in
March 2009. Such a cut would boost lending and shore up household
spending, helping to offset at least part of the Brexit shock.
The
bank could also re-start the so-called quantitative easing program
under which it effectively pumps money into the economy via the purchase
of government bonds from financial institutions.
Hammond acknowledged that investment in Britain had been shaken since the referendum result.
“There
has been a chilling effect,” he told the BBC. “We have seen an effect
in markets, we have seen business investment decisions being paused
because businesses now want to take stock, want to understand how we
will take forward our renegotiation with the EU, what our aspirations
are for the future trading relationship between Britain and the European
Union.”
May was scheduled to make more appointments after a raft
of senior positions were announced in the hours after she formally
accepted the task of forming a new government following a meeting with
Queen Elizabeth II.
The new leader has been quickly moving to put
her stamp on the office, making one of her first tasks in office to
fire George Osborne, the Treasury chief who campaigned for the country
to stay in the European Union.
Controversially, she installed former London Mayor Boris Johnson as foreign secretary.