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Philip Hammond says UK should stick to EU customs rules for period after Brexit - Politics live Philip Hammond says UK should stick to EU customs rules for period after Brexit - Politics live
(35 minutes later)
10.40am BST
10:40
Carney mocks Boris Johnson and suggests Brexit is a threat to the economy
Mark Carney’s speech (pdf) was a fairly classy production, involving footnotes, graphs and sarcasm. Here are the key points.
Carney, the governor of the Bank of England, suggested that Brexit was a threat to the economy. In his speech he said Brexit had already led to the markets downgrading the UK’s economic prospects. He said:
Since the prospect of Brexit emerged, financial markets, notably sterling, have marked down the UK’s economic prospects.
In a footnote to the speech, he elaborated on this point.
The sterling ERI has fallen close to 20% from its November 2015 peak. Since then, UK-focused equity prices have fallen by over 2%. In contrast, broader equity price indices such as the FTSE 100 and S&P 500, which more heavily reflect global economic considerations, are almost 20% and 40% higher respectively (in sterling terms). UK 10-year real government bond yields have fallen 115 basis points; by contrast 10-year real government bond yields in the US are down by around 25 basis points only.
Carney also went on to suggest that Brexit could have a negative impact on wages, jobs and prices.
Monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU. But it can influence how this hit to incomes is distributed between job losses and price rises. And it can support households and businesses as they adjust to such profound change.
He mocked Boris Johnson’s claim that Britain would be able to “have its cake and eat it” after Brexit. He did not mention Johnson, the foreign secretary, directly, but it was clear who he meant when he said, with mild sarcasm.
Markets have already anticipated some of the adjustment. Depending on whether and when any transition arrangement can be agreed, firms on either side of the channel may soon need to activate contingency plans. Before long, we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption.
Carney said that he personally thought that now was not the time for interest rate rises, and he said that all members of the monetary policy committee (MPC) were agreed that, when rates did rise, they would rise gradually.
As spare capacity erodes, the trade-off that the MPC must balance lessens, and all else equal, its tolerance for above-target inflation falls. Different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank Rate increase. But all expect that any changes would be limited in scope and gradual in pace.
From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment.
He suggested that he did not think the budget deficit was sustainable.
In this environment, the UK is running a historically large current account deficit. On the positive side, the deficit is funded in domestic currency and financial reforms have increased the resilience of the UK system, thereby making larger imbalances more sustainable. But the UK’s deficit has also been associated with markedly weak investment and latterly with rapid consumer credit growth. This is not an imbalance that is, as yet, funding its eventual resolution.
Moreover, despite the large depreciation around the referendum, the extent to which the UK’s deficit has moved closer to sustainability remains an open question, one whose answer depends crucially on the outcome of the Brexit negotiations.
Most fundamentally, the UK relies on the kindness of strangers [ie, the willingness of others to lend money to the UK] at a time when risks to trade, investment, and financial fragmentation have increased.
He said he was opposed to fragmentation of financial services after Brexit. Philip Hammond made a similar point in his speech, but Carney spoke about this specifically in the context of central counterparty (CCP) clearing houses, such as those in the City involved in the euro clearing business. He said:
Fragmenting liquidity would drive up costs somewhat in the remaining market as well. On current volumes, almost 90% of swaps are traded by non-EU firms and could remain in the main UK-based liquidity pool. Given the size of this market, the impacts could be expected to be much smaller, although not insignificant.
Fragmentation is in no one’s economic interest. Nor is it necessary for financial stability. Indeed it can damage it. Fragmenting clearing would lead to smaller liquidity pools in CCPs, reducing the ability to diversify risks and diminishing resilience. And higher costs would reduce the incentives to hedge risks, increasing the amount of risk that the real economy would have to bear.
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Here is some more Twitter reaction to Philip Hammond’s speech.Here is some more Twitter reaction to Philip Hammond’s speech.
From Paul Mason, the Guardian columnistFrom Paul Mason, the Guardian columnist
Hammond signalled no further loosening of fiscal policy this morning - here's what that will mean https://t.co/xLMrvrIu88Hammond signalled no further loosening of fiscal policy this morning - here's what that will mean https://t.co/xLMrvrIu88
From Sky’s Lewis GoodallFrom Sky’s Lewis Goodall
astonishing: Hammond barely mentioned any benefits to Brexit at all. Spoke about it as if he were mitigating a natural disaster.astonishing: Hammond barely mentioned any benefits to Brexit at all. Spoke about it as if he were mitigating a natural disaster.
Extraordinary speech from Hammond. given up pretending he thinks there are benefits to Brexit. Confirmation that May's authority has gone.Extraordinary speech from Hammond. given up pretending he thinks there are benefits to Brexit. Confirmation that May's authority has gone.
(To be fair, I don’t remember Hammond ever giving speeches saying there were huge benefits to Brexit.)(To be fair, I don’t remember Hammond ever giving speeches saying there were huge benefits to Brexit.)
Hammond has basically just given the most enormous two fingers to the idea that no deal is better than a bad deal.Hammond has basically just given the most enormous two fingers to the idea that no deal is better than a bad deal.
And my colleague Dan Roberts did like Hammond’s Osborne joke.And my colleague Dan Roberts did like Hammond’s Osborne joke.
it's rare that politician's jokes make me laugh, rarer still for an economics gag. but Hammond on Osborne's contribution to employment data!it's rare that politician's jokes make me laugh, rarer still for an economics gag. but Hammond on Osborne's contribution to employment data!
"we have the strongest employment growth since blah blah, and that's even if we only count George Osborne once" - better first time perhaps."we have the strongest employment growth since blah blah, and that's even if we only count George Osborne once" - better first time perhaps.
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Hammond's speech - SummaryHammond's speech - Summary
Here are the main points from Philip Hammond’s Mansion House speech.Here are the main points from Philip Hammond’s Mansion House speech.
Hammond, the chancellor, said the UK should abide by EU customs union rules for a period after Brexit. (See 9.08am) This would almost certainly lead to a delay in the UK being able to implement new trade deals with other countries, because the EU would not let the UK set its own tariffs while it was still effectively in the customs union.Hammond, the chancellor, said the UK should abide by EU customs union rules for a period after Brexit. (See 9.08am) This would almost certainly lead to a delay in the UK being able to implement new trade deals with other countries, because the EU would not let the UK set its own tariffs while it was still effectively in the customs union.
He insisted the government would “manage migration ... not seek to shut it down’ after Brexit.He insisted the government would “manage migration ... not seek to shut it down’ after Brexit.
Just as the British people understand the benefits of trade – so, too, they understand how important it is to business to be able to access global talent and to move individuals around their organisations.Just as the British people understand the benefits of trade – so, too, they understand how important it is to business to be able to access global talent and to move individuals around their organisations.
So, while we seek to manage migration, we do not seek to shut it down.So, while we seek to manage migration, we do not seek to shut it down.
He confirmed that he wanted Brexit to involve a transitional phase, “to avoid unnecessary disruption and dangerous cliff edges”.He confirmed that he wanted Brexit to involve a transitional phase, “to avoid unnecessary disruption and dangerous cliff edges”.
He claimed that some Europeans were already using Brexit to seek to impose “protectionist” restrictions on the City.He claimed that some Europeans were already using Brexit to seek to impose “protectionist” restrictions on the City.
Let’s be honest, we are already hearing protectionist agendas being advanced, disguised as arguments about regulatory competence, financial stability, and supervisory oversight.Let’s be honest, we are already hearing protectionist agendas being advanced, disguised as arguments about regulatory competence, financial stability, and supervisory oversight.
We can have no truck with that approach.We can have no truck with that approach.
But we acknowledge that, as Britain leaves the EU, there are genuine and reasonable concerns among our EU colleagues about oversight of financial markets that will then be outside EU jurisdiction, but which provide a vast proportion of economically vital financial services to EU firms and citizens.But we acknowledge that, as Britain leaves the EU, there are genuine and reasonable concerns among our EU colleagues about oversight of financial markets that will then be outside EU jurisdiction, but which provide a vast proportion of economically vital financial services to EU firms and citizens.
He said Europe needed to avoid the “fragmentation of financial services” and he said Brexit would have to involve “evidence-based, symmetrical and transparent” rules for the regulation of financial services.He said Europe needed to avoid the “fragmentation of financial services” and he said Brexit would have to involve “evidence-based, symmetrical and transparent” rules for the regulation of financial services.
He said he wanted a Brexit “that puts jobs and prosperity first”. (This is similar to Labour’s slogan; it wants a “jobs-first Brexit”.)He said he wanted a Brexit “that puts jobs and prosperity first”. (This is similar to Labour’s slogan; it wants a “jobs-first Brexit”.)
He said he was taking measures to expand the supply of capital funding in the UK, to compensate for the impact of the UK no longer getting European Investment Bank infrastructure investment after Brexit. He said that he would broaden the range of the UK guarantee scheme so that it offers construction guarantees for the first time, that the British Business Bank would increase the amount it invests in venture capital funds and that he would bring forward some of the investment in the autumn statement.He said he was taking measures to expand the supply of capital funding in the UK, to compensate for the impact of the UK no longer getting European Investment Bank infrastructure investment after Brexit. He said that he would broaden the range of the UK guarantee scheme so that it offers construction guarantees for the first time, that the British Business Bank would increase the amount it invests in venture capital funds and that he would bring forward some of the investment in the autumn statement.
He acknowledged that the public were “weary” of austerity. And he said that he had already relaxed the government’s anti-austerity drive, setting a longer timescale for getting the budget into surplus when he took over as chancellor last year. But he played down the prospect of further measures to undo austerity, saying that he was opposed to higher taxes or higher borrowing.He acknowledged that the public were “weary” of austerity. And he said that he had already relaxed the government’s anti-austerity drive, setting a longer timescale for getting the budget into surplus when he took over as chancellor last year. But he played down the prospect of further measures to undo austerity, saying that he was opposed to higher taxes or higher borrowing.
Funding for public services can only be delivered in one of three ways:Funding for public services can only be delivered in one of three ways:
Higher taxes;Higher taxes;
Higher borrowing;Higher borrowing;
Or stronger economic growth.Or stronger economic growth.
And only one of those three choices is a long-term sustainable solution for this country in the face of the inexorable pressure of an ageing population.And only one of those three choices is a long-term sustainable solution for this country in the face of the inexorable pressure of an ageing population.
Higher taxes will slow growth, undermine competitiveness, and cost jobs…Higher taxes will slow growth, undermine competitiveness, and cost jobs…
…so the government will remain committed to keeping taxes as low as possible;…so the government will remain committed to keeping taxes as low as possible;
And higher discretionary borrowing to fund current consumption is simply asking the next generation to pay for something that we want to consume, but are not prepared to pay for ourselves…And higher discretionary borrowing to fund current consumption is simply asking the next generation to pay for something that we want to consume, but are not prepared to pay for ourselves…
…so we will remain committed to the fiscal rules set out at the Autumn Statement which will guide us, via interim targets in 2020, to a balanced budget by the middle of the next decade.…so we will remain committed to the fiscal rules set out at the Autumn Statement which will guide us, via interim targets in 2020, to a balanced budget by the middle of the next decade.
Stronger growth is the only sustainable way to deliver better public services, higher real wages and increased living standards.Stronger growth is the only sustainable way to deliver better public services, higher real wages and increased living standards.
He acknowledged that globalisation was unpopular and said the government would push for a new version, with a greater focus on services. This was “Gloablisation 2.0”, he implied, although he did not use that phrase.He acknowledged that globalisation was unpopular and said the government would push for a new version, with a greater focus on services. This was “Gloablisation 2.0”, he implied, although he did not use that phrase.
Britain has benefited from globalisation.Britain has benefited from globalisation.
But we must not turn a blind eye to the growing tide of hostility to it in parts of the developed world.But we must not turn a blind eye to the growing tide of hostility to it in parts of the developed world.
To counter that, we must push for a new phase of globalisation, to ensure that it delivers clear benefits for ordinary working people in developed economies.To counter that, we must push for a new phase of globalisation, to ensure that it delivers clear benefits for ordinary working people in developed economies.
To date, much of the thrust of globalisation has focused on the removal of barriers to trade in goods.To date, much of the thrust of globalisation has focused on the removal of barriers to trade in goods.
“Globalisation 1.0” if you like - expanding the opportunities for major goods exporters like China and Germany to sell their products to a larger market.“Globalisation 1.0” if you like - expanding the opportunities for major goods exporters like China and Germany to sell their products to a larger market.
But our economy is 80% services.But our economy is 80% services.
And many of our areas of greatest competitiveness are in services: for example, finance and insurance, ICT and communications.And many of our areas of greatest competitiveness are in services: for example, finance and insurance, ICT and communications.
So, for the UK to be able to share fairly in the benefits of globalisation, we need to lead a global crusade for liberalisation of services.So, for the UK to be able to share fairly in the benefits of globalisation, we need to lead a global crusade for liberalisation of services.
He said the government “must, and will, also get to the bottom of the failure at Grenfell [Tower] and take decisive action to ensure nothing like this ever happens again.”He said the government “must, and will, also get to the bottom of the failure at Grenfell [Tower] and take decisive action to ensure nothing like this ever happens again.”
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I’m sorry the comments were left off earlier. That was an oversight. They are on now.I’m sorry the comments were left off earlier. That was an oversight. They are on now.
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What Hammond said about the UK sticking with EU customs union rules for short term after BrexitWhat Hammond said about the UK sticking with EU customs union rules for short term after Brexit
This is what Philip Hammond, the chancellor, said in his speech about how Britain would have to abide by EU customs union rules for a period after Brexit.This is what Philip Hammond, the chancellor, said in his speech about how Britain would have to abide by EU customs union rules for a period after Brexit.
So, how do we achieve this “Brexit for Britain”? ...So, how do we achieve this “Brexit for Britain”? ...
By agreeing frictionless customs arrangements to facilitate trade across our borders – and crucially – to keep the land border on the island of Ireland open and free-flowing.By agreeing frictionless customs arrangements to facilitate trade across our borders – and crucially – to keep the land border on the island of Ireland open and free-flowing.
To do this in the context of our wider objectives will be challenging.To do this in the context of our wider objectives will be challenging.
It will almost certainly involve the deployment of new technology.It will almost certainly involve the deployment of new technology.
And therefore we’ll almost certainly need an implementation period, outside the customs union itself, but with current customs border arrangements remaining in place, until new long-term arrangements are up and running.And therefore we’ll almost certainly need an implementation period, outside the customs union itself, but with current customs border arrangements remaining in place, until new long-term arrangements are up and running.
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Pound falls after Bank of England governor says now is not the time to raise interest ratesPound falls after Bank of England governor says now is not the time to raise interest rates
The pound has fallen to a one-week low against the US dollar, as Mark Carney declares it is too early to raise interest rates.The pound has fallen to a one-week low against the US dollar, as Mark Carney declares it is too early to raise interest rates.
The Bank of England governor is telling the Mansion House audience that the UK economy isn’t strong enough to handle higher interest rates, especially as we don’t know how the Brexit talks will proceed.The Bank of England governor is telling the Mansion House audience that the UK economy isn’t strong enough to handle higher interest rates, especially as we don’t know how the Brexit talks will proceed.
This sent the pound sharply lower, to $1.2674:This sent the pound sharply lower, to $1.2674:
Carney explains that he doesn’t agree with the three members of the Monetary Policy Committee (MPC) who voted to hike borrowing costs last week (they were outvoted by the other five members, including Carney).Carney explains that he doesn’t agree with the three members of the Monetary Policy Committee (MPC) who voted to hike borrowing costs last week (they were outvoted by the other five members, including Carney).
Here’s the relevant section from Mark Carney’s speech:Here’s the relevant section from Mark Carney’s speech:
Different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank Rate increase. But all expect that any changes would be limited in scope and gradual in pace.Different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank Rate increase. But all expect that any changes would be limited in scope and gradual in pace.
From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment.From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment.
In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.
Here’s the moment that traders saw those quotes:Here’s the moment that traders saw those quotes:
The pound falls after Mark Carney says it's not yet time to raise interest rates in Britain https://t.co/8l0x5mr7gl pic.twitter.com/TBHvfg4q3hThe pound falls after Mark Carney says it's not yet time to raise interest rates in Britain https://t.co/8l0x5mr7gl pic.twitter.com/TBHvfg4q3h
My colleague Graeme Wearden has more on his business live blog.My colleague Graeme Wearden has more on his business live blog.
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at 9.02am BSTat 9.02am BST
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The Carney speech involves some hardcore macroeconomics. Nothing wrong with that, of course, but rather than do it minute by minute, it is probably best if I just summarise from the full text.The Carney speech involves some hardcore macroeconomics. Nothing wrong with that, of course, but rather than do it minute by minute, it is probably best if I just summarise from the full text.
I’ve got a full text of the Hammond speech too, so I will summarise that first.I’ve got a full text of the Hammond speech too, so I will summarise that first.
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Carney says UK faces 'weaker real income growth' as Brexit takes placeCarney says UK faces 'weaker real income growth' as Brexit takes place
This is what Carney said about Brexit.This is what Carney said about Brexit.
Since the prospect of Brexit emerged, financial markets, notably sterling, have marked down the UK’s economic prospects.Since the prospect of Brexit emerged, financial markets, notably sterling, have marked down the UK’s economic prospects.
Monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU. But it can influence how this hit to incomes is distributed between job losses and price rises. And it can support households and businesses as they adjust to such profound change. Indeed, in such exceptional circumstances, the MPC is required to balance any trade-off between the speed with which it returns inflation sustainably to the target and the support that monetary policy provides to jobs and activity.Monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU. But it can influence how this hit to incomes is distributed between job losses and price rises. And it can support households and businesses as they adjust to such profound change. Indeed, in such exceptional circumstances, the MPC is required to balance any trade-off between the speed with which it returns inflation sustainably to the target and the support that monetary policy provides to jobs and activity.
That is why last summer the Bank announced a series of monetary and macro-financial measures to support the economy during this transition. This stimulus is working. Credit is widely available, the cost of borrowing is near record lows, the economy has outperformed expectations, and unemployment has reached a 40 year low.That is why last summer the Bank announced a series of monetary and macro-financial measures to support the economy during this transition. This stimulus is working. Credit is widely available, the cost of borrowing is near record lows, the economy has outperformed expectations, and unemployment has reached a 40 year low.
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The full text of Mark Carney’s speech is now here (pdf), on the Bank of England’s website.The full text of Mark Carney’s speech is now here (pdf), on the Bank of England’s website.
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Mark Carney's speechMark Carney's speech
Mark Carney, the governor of the Bank of England, starts by referring to the recent terrorist attacks, and to the murder of Jo Cox last year. We must respond by building a Brexit that works for all.Mark Carney, the governor of the Bank of England, starts by referring to the recent terrorist attacks, and to the murder of Jo Cox last year. We must respond by building a Brexit that works for all.
He turns to Brexit, and warns that people face weaker real income growth. It is not time for an interest rate rise, he says.He turns to Brexit, and warns that people face weaker real income growth. It is not time for an interest rate rise, he says.
Mark Carney makes direct link between Brexit process & "weaker real income growth" - people poorer. "Not yet time" for interest rate riseMark Carney makes direct link between Brexit process & "weaker real income growth" - people poorer. "Not yet time" for interest rate rise
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Here is some snap reaction to Philip Hammond’s speech.Here is some snap reaction to Philip Hammond’s speech.
From Dan Roberts, the Guardian’s Brexit editorFrom Dan Roberts, the Guardian’s Brexit editor
Hammond tells Mansion House speech that City is already on receiving end of "protectionist" tactics from Europe - "disguised as regulation".Hammond tells Mansion House speech that City is already on receiving end of "protectionist" tactics from Europe - "disguised as regulation".
Feels like Hammond is toning it down on Brexit this morning. Has he had his spreadsheet locked?Feels like Hammond is toning it down on Brexit this morning. Has he had his spreadsheet locked?
From the Daily Mirror’s Jack BlanchardFrom the Daily Mirror’s Jack Blanchard
Hammond in summary:- Jobs & prosperity the priority for Brexit- Immigration is good- Customs union arrangements should stay for some timeHammond in summary:- Jobs & prosperity the priority for Brexit- Immigration is good- Customs union arrangements should stay for some time
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Hammond says Britain can get a Brexit deal that puts jobs first.Hammond says Britain can get a Brexit deal that puts jobs first.
Yesterday was a confident start, he says.Yesterday was a confident start, he says.
He now hands over to the next speaker, Mark Carney, the governor of the Bank of England.He now hands over to the next speaker, Mark Carney, the governor of the Bank of England.
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Hammond says UK should stick to EU customs union rules for period after BrexitHammond says UK should stick to EU customs union rules for period after Brexit
Hammond asks how Britain can achieve a Brexit that works for the people.Hammond asks how Britain can achieve a Brexit that works for the people.
He identifies four priorities.He identifies four priorities.
First, it must get a comprehensive agreement on trade and services.First, it must get a comprehensive agreement on trade and services.
Second, there must be mutually beneficial transitional arrangement, avoiding disruption and dangerous cliff edges.Second, there must be mutually beneficial transitional arrangement, avoiding disruption and dangerous cliff edges.
Third, there must be frictionless customs arrangements.Third, there must be frictionless customs arrangements.
This will involve an implementation period, when the UK will be outside the customs union, but customs rules will remain in place pending the new rules coming into force.This will involve an implementation period, when the UK will be outside the customs union, but customs rules will remain in place pending the new rules coming into force.
Hammond says the UK expects to abide by customs union rules for an “implementation period” after Brexit.Hammond says the UK expects to abide by customs union rules for an “implementation period” after Brexit.
He says the new system will also involve investment in technology.He says the new system will also involve investment in technology.
And, fourth, there must be arrangements in place to protect the City, he says.And, fourth, there must be arrangements in place to protect the City, he says.
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Hammond is now turning to Brexit.Hammond is now turning to Brexit.
He says the government set out its view in the prime minister’s Lancaster House speech.He says the government set out its view in the prime minister’s Lancaster House speech.
But this is a negotiation, he says.But this is a negotiation, he says.
He says people voted to leave the EU. But they did not vote to become poorer.He says people voted to leave the EU. But they did not vote to become poorer.
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Hammond says the government does not want to “turn inward” after Brexit.Hammond says the government does not want to “turn inward” after Brexit.
But trade arrangements must work for the benefit of the UK.But trade arrangements must work for the benefit of the UK.
Whilst we seek to manage migration, we do not seek to shut it down.Whilst we seek to manage migration, we do not seek to shut it down.
Hammond says the government will not “shut down” immigration after Brexit.Hammond says the government will not “shut down” immigration after Brexit.
He quotes from what the Conservative manifesto says about globalisation.He quotes from what the Conservative manifesto says about globalisation.
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Hammond says it may be beneficial to maintain a relationship with the European Investment Bank (EIB) after Brexit.Hammond says it may be beneficial to maintain a relationship with the European Investment Bank (EIB) after Brexit.
But he says he will not take that for granted.But he says he will not take that for granted.
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Hammond says the government wants to drive up productivity.Hammond says the government wants to drive up productivity.
He says if productivity goes up by just a quarter of 1%, over 10 years that will add £67bn to the economy.He says if productivity goes up by just a quarter of 1%, over 10 years that will add £67bn to the economy.
He says that is equivalent to £2,400 for every household.He says that is equivalent to £2,400 for every household.
He says the government wants to make every learner more skilled, every worker more productive, every business more competitive and every public service more efficient.He says the government wants to make every learner more skilled, every worker more productive, every business more competitive and every public service more efficient.
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Hammond says people are “weary of seven years of hard slog” (ie, austerity).Hammond says people are “weary of seven years of hard slog” (ie, austerity).
But if the government wants to spend more, it can only do so three ways.But if the government wants to spend more, it can only do so three ways.
It can tax more - but the Conservatives are committed to low taxes, he says.It can tax more - but the Conservatives are committed to low taxes, he says.
It can borrow more - but he says he is sticking to his deficit reduction targets.It can borrow more - but he says he is sticking to his deficit reduction targets.
That only leave higher growth and higher productivity, he says.That only leave higher growth and higher productivity, he says.
Hammond says he learnt during the election that the Tories have to make the case again for higher productivity.Hammond says he learnt during the election that the Tories have to make the case again for higher productivity.
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Philip Hammond gives Mansion House speechPhilip Hammond gives Mansion House speech
Philip Hammond, the chancellor, has just started giving his Mansion House speech. He was due to give it last week, but it was cancelled after the Grenfell Tower fire.Philip Hammond, the chancellor, has just started giving his Mansion House speech. He was due to give it last week, but it was cancelled after the Grenfell Tower fire.
Instead he is now, unusually, giving it in the morning.Instead he is now, unusually, giving it in the morning.
He started by talking about the fire, and saying that the survivors must get everything they need.He started by talking about the fire, and saying that the survivors must get everything they need.
And he said the government must get to the bottom of what caused it.And he said the government must get to the bottom of what caused it.
He then spoke about the state of the economy, saying it was in good shape.He then spoke about the state of the economy, saying it was in good shape.
Now he is turning to the future.Now he is turning to the future.