Philip Hammond

Economy 'has to be able to pop back to life'

Today Programme

BBC Radio 4

Rishi Sunak
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Chancellor Rishi Sunak has confirmed plans for wage subsidies for UK employees

Karen Ward was a special adviser to former chancellor Philip Hammond during his time in Number 11 Downing Street.

She told the BBC’s Today programme that it was “hard to fault” the measures that new Chancellor Rishi Sunak has brought in, aimed at boosting the economy.

“We’ve never had an absolute stop in activity in this kind of manner. So what they’re trying to do is get in place policies so that the economy can continue to run in this suspended animation - making sure people stay in work.”

She called the prospect for the economy for the second quarter of this year “horrific”, but said: “What’s really important is the bounceback. When this disease is contained, which we don’t know when will happen, the economy has to be able to pop back to life really quickly.”

Chancellor 'should ease cash flow pressure on firms'

Today Programme

BBC Radio 4

Rishi Sunak
EPA

Chancellor Rishi Sunak (pictured) is "in a difficult position because he's trying to deliver a Budget against a backdrop of dramatic action in the markets and a real-time unfolding situation" says former Chancellor Philip Hammond.

"He's got to balance the obvious desire to do something and to be seen to be doing something with a certain caution that we don't know where this is going yet, and the key thing is to have reserves of firepower so that he can continue to respond."

So what is he likely to do? Mr Hammond says he will probably emphasise that there is also a Spending Review and a second Budget this year, and that Mr Sunak will say he will come back to he House of Commons and make a supplementary statement if and when needed.

"He will want, and I would strongly advise, that he announces immediate short term measures to ease the cash-flow pressure that many small businesses will be feeling, and indeed some larger businesses, for example by postponing deadlines for payment of VAT, National Insurance and PAYE deductions, to help businesses that are facing a cash emergency now."

He says the challenge for the Chancellor is that this is a "classic demand-deficit problem where the economy just needs a bit of stimulus so people go out and spend more money."

"The problem here is primarily one of supply. If people can't get to work, goods and services aren't being produced, and you can't solve that problem just by putting more demand into the economy."

Coronavirus 'bound to cause economic growth slowdown'

Today Programme

BBC Radio 4

How great are the chances of coronavirus putting the UK economy into recession, former Chancellor Philip Hammond is asked?

"Well, it's bound to cause a slowdown in economic growth," he says. "The government's challenge, the Chancellor's challenge, will be to try to support the economy in a way that avoids a slowdown, tipping over into recession."

He points out that a recession is defined as starting after two quarters of negative economic growth, and "we don't know yet how long the virus epidemic is going to last, how deep it's going to be".

"So it may well be that economic growth slows down quite sharply, but then recovers quite quickly when the epidemic is over."

Economic impact of virus 'will be real' says Hammond

Today Programme

BBC Radio 4

Philip Hammond
pa media

We're a day away from the Budget and after the biggest sell off on the financial markets since 2008 reduced the values of leading FTSE companies by more than £100bn after markets reacted to falling oil prices and the economic effects of coronavirus.

Former Chancellor Philip Hammond says the virus is "clearly a human tragedy that's playing out here, and it will affect hundreds of thousands of families across Britain and beyond, and we don't know... yet what the full extent of the epidemic is going to be.

"What we do know is that it will have an effect on the economy, because that's already starting to happen, and whatever the outcome epidemiologically, the economic impact will be real. The Chancellor will want to address that in his Budget speech tomorrow."

UK 'still vulnerable to economic shock'

Today Programme

BBC Radio 4

Sajid Javid
GETTY IMAGES

More on the reshuffle that saw Sajid Javid resign as chancellor on Thursday.

The government has yet to confirm if incoming Chancellor Rishi Sunak will continue with existing plans to unveil a Budget on 11 March - or if he'll stick to his predecessor's rules on borrowing.

Karen Ward was a special advisor to former chancellor Philip Hammond during his time in Number 11 Downing Street.

She told the BBC's Today programme Mr Javid's resignation was a "surprising" decision.

She said: "It did seem as if Mr Javid was very much in line with broad thinking in Number 10, which was that there should be less concern about the level of debt."

However, she did advise some caution for Mr Sunak: "I think we have to remember why the period of austerity was in place, which was that the level of debt in the UK is still very large. We stabilised, if you like, how much we're adding to it on a year-to-year basis, but we still owe £1.8tn. That does leave us vulnerable to things like an economic shock, interest rates rising."

Former Chancellor gets new job

Philip Hammond
PA Media

Former Chancellor of the Exchequer Philip Hammond is bouncing back after quitting the Commons.

He has been appointed to the board of Irish packaging Ardagh where he will be a non-executive director and serve on its audit committee.

The company, which is worth £3.5bn, hasn't revealed how much Hammond will be paid.

But you may be more familiar with the company you realise.

The company claims that "in an average household globally, you will find at least six products in packaging produced by Ardagh Group".