'Spreadsheet Phil' and the Great Brexit Brouhaha

27 October 2016

Chancellor Philip Hammond – dubbed ‘spreadsheet Phil’ by MPs and ‘No-Thrills Phil’ by the press – has risen to the top of British politics without giving much hint of anything so risky as a personality, or showing signs of the vices that have stalled the careers of some of his Cabinet colleagues. Yet with the uncertainty caused by the EU referendum result, Mr Hammond is in a vital position, comparable in many ways to that other eminence grise, Alistair Darling, who steadied the ship after the financial crisis.

The Chancellor is in many ways a paradox. Instinctively Eurosceptic, he backed Remain in the referendum campaign and has emerged as one of the strongest voices in favour of minimising the economic rupture with the EU. Regarded as a fiscal hawk, as Defence Secretary he opposed budget cuts. From a modest background, his successful pre-Parliament career makes him one of the wealthiest MPs. Usually viewed as bland and dispassionate, he reportedly labelled MP Bill Cash a “total shit” for leaking a key document during the UK’s failed renegotiation of its EU membership.

The most pertinent of these contradictions relates to his position on the EU. In his party conference speech, the Chancellor stressed that the UK “did not vote… to become poorer” when opting to leave the EU. These remarks were immediately interpreted as warning against a damaging settlement with the rest of the EU which could leave the UK with substantially reduced access to the Single Market.

The Chancellor has not said that the UK should seek continued membership of the Single Market, for example via membership of the European Economic Area. Doing so would presumably render impossible the other objectives described by Prime Minister Theresa May, such as ending the free movement of people and removing the UK from the jurisdiction of EU courts. Yet the fact that Mr Hammond was willing to countenance a less-than-total Brexit was enough to earn him the ire of some Conservative Brexiteers, who seemingly began to brief against the Chancellor.

Mr Hammond is acutely aware that the Single Market is vitally important to the UK economy and especially the financial sector: at minimum, a high level of access will be required. The leak of a document prepared by the Treasury, suggesting losing access could cost the UK between 5.4 per cent and 9.5 per cent of GDP, may not have been entirely accidental if the Chancellor is seeking to prepare the ground for an effort to face down the Eurosceptics and insist on maintaining close economic ties.

The exact relationship on which he will settle remains unclear, but will almost certainly need to be more ambitious than any current EU free trade agreement – including the ill-fated TTIP and CETA – because these focus primarily on goods, whereas the UK’s economy and exports centre on services.

Any attempt to predict the Chancellor’s exact line is for now little better than guesswork. What can be said with confidence is that Mr Hammond is not unduly ideological. He has already rejected his predecessor George Osborne’s fiscal target of a Budget surplus by 2020. Earlier in his career, he fought the Treasury on defence spending, allowing the UK to continue to spend two per cent of GDP on the military and resisting budget cuts which could have sent British troops into battle with defective or inferior equipment.

Mr Hammond also appears temperamentally well suited to the task at hand. He has won a reputation for being dispassionate, competent and a safe pair of hands, earning respect as Foreign Secretary for his handling of multiple crises. In his stance on the UK’s relationship with Saudi Arabia, he displayed a level of ruthless realism which may be useful in negotiations on Brexit, defending the strategic necessity of the alliance while also contributing to the controversial nuclear deal with Iran. This ability to cultivate good relations with occasionally duplicitous ideologues may prove valuable in the coming months.

Mr Hammond’s strong streak of pragmatism and level-headedness therefore seems likely to serve the Chancellor well in his time at Number 11, tempering his eurosceptic instincts with a steady concern for the good of the economy he is charged with stewarding through challenging times.

Chancellor Philip Hammond will deliver the Autumn Statement on Wednesday 23 November. This article forms part of DeHavilland's Autumn Statement speculation briefing, a full account of the background to the speech and all the details to emerge so far. For more information, please contact your Monitoring Consultant.

Ben Zwolinski
News Assistant

As News Assistant, Ben keeps DeHavilland's Newsdesk functions running smoothly from day to day. A graduate of the University of Sheffield, Ben has experience working for the Council of the EU, and completed a traineeship with Scotland Europa and the City of London Corporation office in Brussels.