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Philip Hammond said the government should abandon economic plans that it would lay out in Monday's budget, supposed to end austerity, in the event of a Brexit without agreement.
In an interview with Sky's Sophy Ridge on Sunday, the Chancellor said that the proposals announced Monday afternoon were based on the assumption that there would be an agreement on Brexit and that, if that happened proved wrong, it would take a new, urgent budget.
Making it clear that this would imply significant tax cuts, pushing the UK towards an economic model in Singapore, Hammond said the government would need a "different strategy for the future." ".
John McDonnell, the Chancellor of the Shadow, said he was shocked by what he reportedly presented to Hammond, which went back to a plan presented for the first time in January 2017 to transform the United Kingdom. United in a tax haven for business, in case the EU would refuse to cooperate on a trade agreement.
Hammond said in his interview that he was very confident that the UK is negotiating an agreement with the EU including providing for "friction-free access to European markets on a reciprocal basis".
When asked what would happen if he did not agree, he replied, "If we do not agree, if we do not agree, we had to leave the European Union without agreement – and I think this is an extremely unlikely situation, but of course we have to prepare and plan all eventualities, as would any prudent government – if we ended up in this situation, we had to take a different approach to the future of the British economy.
"Frankly, we would not need a new budget that sets out a different strategy for the future."
When asked if there would be less money available for departments, he replied, "We would have to wait to see what the situation was." If we leave the European Union without an agreement, we would like to see how markets, businesses and consumers have responded.
"And, like any responsible government, we would take the appropriate fiscal measures to protect the economy, prepare for the future, and move in a new direction that would allow Great Britain to succeed, regardless of the circumstances in which we were there. in."
Hammond has not specified the tax measures that he could introduce, but economists expect him to introduce substantial tax cuts, financed by debt, in order to minimize the risk of recession, as the Labor government did in 2008 by reducing VAT.
The Chancellor also did not tell Sky what he meant by a different economic strategy in the event of a Brexit without agreement, but it seemed to refer to a move towards a an economic model generating low taxes, reduced spending and weak regulation. of the kind favored by some Brexiters to the conservative right.
He announced this option last year, but ministers have downplayed it more recently, stressing their commitment to safeguarding workers' rights and the welfare state.
Asked later in an interview with the BBC whether his alternative strategy would involve a Singaporean approach, Hammond said, "What I was saying [in January 2017] It was nothing but a blinding statement of blame. If our companies are no longer able to trade with their neighbors in the European Union, if their supply chains are cut, they will have to find different markets and different ways of doing business.
"And of course, the government, no matter what the government, would like to help it do that and ensure that we do everything possible to facilitate what will be a very big transition in the functioning of the British economy."
Hammond also declined to immediately reject a suggestion that even if there was an agreement, the UK would be worse after Brexit. When he was told that this would be the case even as part of the Checkers government plan, he stated that an agreement providing for low friction at borders and between borders "would minimize any negative effect on the UK." ".
McDonnell said Hammond "seems to have accepted a Brexit without agreement, and he wants us to be in the image of Singapore, a tax haven, which will undermine our manufacturing industry and endanger the standard of living of the people." .
