Business cheers Autumn Statement as Chancellor Philip Hammond does his best to ignore Brexit elephant in room

Philip Hammond could hardly have got a better reaction from business, but it will be a different story if the UK continues to drift towards a hard Brexit 

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The Independent Online

When you’re planning to cut off the nose of business to spite the nation’s face you have to do something to ease the pain. 

Chancellor Philip Hammond tried hard to do that, scattering as many sweeties around the business community as he was able to. Nearly all of which had previously been announced by his boss Theresa May, but she rather needed to make a good impression at the CBI on Monday. Its members are privately scared witless by the elephant in the room that Mr Hammond barely mentioned: Brexit

The Chancellor duly confirmed that corporation tax will ultimately fall to 17 per cent, there was a promise of £2bn of R&D spending annually by 2020, another bung designed to encourage better broadband provision. 

Mr Hammond is going to borrow a lot more than his predecessor had planned to, but a chunk of that (£23bn) will go towards funding innovation and improving the nation’s infrastructure. That counts as good borrowing, because there will be an economic pay-off, and businesses will benefit. 

There were some other odds and sods as well, so the Chancellor had something new to talk about. His big reveal – that this will be the last Autumn Statement with the full budget taking place this time next year – looks cosmetic on the face of it. But that too is actually very good news for business. An Autumn budget will give companies more time to plan before the end of the tax year. The new “Spring Statement”, we are told, won’t contain any major fiscal announcements, so life gets easier for those working in finance departments. 

All this worked wonderfully well with a view to getting business onside. 

The CBI said this: “The Chancellor has prioritised a pragmatic downpayment on future productivity growth. His emphasis on R&D, housing and local infrastructure will help businesses in all corners of the UK to invest with greater confidence for the long term, during turbulent times. This will be warmly welcomed.”

The Engineering Employers Federation said this: “Business was looking for reassurance from the Chancellor at a time of considerable uncertainty and he has helped calm nerves with the right level of pre-Brexit tonic.”

The British Chambers of Commerce chimed in with this: “Philip Hammond has delivered a responsible, solid and focused package that will reassure both business and markets.”

Three cheers from three influential business groups. It doesn’t get much better than that. 

But here’s the problem: None of it matters. None of the forecasts, none of the projections for Government borrowing that keep the Chancellor under 100 per cent of GDP, none of the reassuring words from a man you could easily mistake for an old-school bank manager will count for anything if the UK’s drift towards a “hard” Brexit continues. 

Even if you are prepared to accept the Office for Budgetary Responsibility’s optimistic forecasts – which have the UK economy growing at a faster rate than many of our European partners next year – they will surely have to be revised sharply downwards in the event of that act of lunacy. 

If we have a hard Brexit; if we pull out of the world’s biggest single market, shatter the City by removing its passporting arrangements that facilitate the sale of financial services across the continent, hit other businesses with tariffs they don’t currently have to pay and unnecessarily kick the economy in the teeth, there will be an awful lot of pain coming businesses’ way. There will be an awful lot of pain coming to everyone.   

Businesses have so far bought into the reassuring words of Ms May and Mr Hammond because they’re hoping that it won’t happen, that common sense will prevail and that something sensible will emerge from the UK’s negotiations with the EU. Perhaps the one economist out of 27 polled by Reuters will be right and it won’t play hardball. Perhaps our partners will be prepared to forgive the insults the three Brexiteers (David Davis, Liam Fox and especially Boris Johnson) keep throwing at them. 

Is that a magnum of Prosecco I see flying outside of my window?  

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