'There's no point in crying' over harsh realities of Brexit, Chancellor says

Brexit is causing an unprecedented level of uncertainty which is leading to forecasts of an economic slowdown, Chancellor Philip Hammond has said.

Mr Hammond told ITV's Peston on Sunday "there's no point crying over that fact" and it was the reality of Brexit.

The Chancellor also said it appears clear from forecasts that "inflation is back" and could be a concern for the economy.

Mr Hammond said it was hopefully a "temporary phenomenon" as the effect of sterling's decline feeds through the economy.

He also said he would be setting out a new framework for the economy in his Autumn Statement but declined to reveal "what it's going to look like".

"I'll set out on Wednesday to Parliament what the new fiscal framework is going to look like, I think it's the right way to do it," he added.

  • Hammond: Osborne's set of rules were appropriate for the time

But he reiterated his belief that "it is not longer appropriate to aim to achieve" his predecessor George Osborne's target of getting the nation's books into surplus by 2019.

Mr Hammond added that this ambition had been based on the information that Mr Osborne had available at the time of the March 2016 Budget.

Philip Hammond speaking to Robert Peston Credit: ITV/Peston on Sunday
  • Hammond: We cannot borrow without limit

When asked by Peston about some views that he would adopt a rule that its appropriate to borrow to invest, Mr Hammond declined to address the question but said conceded:

"This economy does need investment but it also needs us to maintain credibility with markets.

"We have a very large debt, we have a very large deficit, and anybody to tells you that we can borrow with limit to do all the good things of course we'd all like to do it not telling you the truth."

But the Chancellor did concede that borrowing is appropriate in some circumstances when it is targeted on "productive, economic investment".

"The things that will improve the productivity of the UK because as we leave the European Union and we start to earn our living in the wider world we are going to have to get ourselves match fit in order to compete."

  • Brexit and single market

Peston also reminded Mr Hammond he once thought those who expected access to the single market and controls on immigration post-Brexit were "mistaken", and asked if he had changed his mind.

On the issue of the single market, he also said: "We don't think the best way to approach this is to assume there are fixed existing structures - the single market, the customs union, and all you have is a binary choice in relation to those."

  • The uncertainty of future UK trading arrangements

The Chancellor also admitted that the Government would have no clarity on what the UK's future trading arrangements will be when it triggers Article 50 of the EU treaties to begin the Brexit process.

"At the moment we haven't served the Article 50 notice and we're not in any substantive negotiations with our European partners so I think it's unlikely that we will have clarity on any of these issues by the end of March."

He added: "It creates a degree of uncertainty but that's a reality, we now have a situation where business will face uncertainty for the next couple of years as these negotiations go on."