Trust Treasury on Brexit?

Philip Hammond under fire as potential reshuffle looms

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Philip Hammond could be reaching the bottom of his poisoned chalice

By Daniel J. McLaughlin

Taking the job as chancellor of the exchequer can be a poisoned chalice. Even in the most prosperous of times for a country's economy, the Treasury has the unpopular job of telling the nation what it can – and more importantly, cannot – spend. When Philip Hammond was handed the role, following the EU referendum and Theresa May's ascent to the premiership, he faced the seemingly impossible task of keeping the UK's economy in shipshape as it enters the unpredictable period of leaving the European Union. Brexit is going to cost Britain – and Philip Hammond's Treasury is going to pay for it.

Mr Hammond has been supping from the poisoned chalice for over a year, but there are rumours that he may take his last sip if Theresa May undertakes a cabinet reshuffle, along with foreign secretary Boris Johnson. The Prime Minister is being urged to sack the Chancellor by Conservative Brexiteers, the Guardian reports, as the right of the party "flexed their muscles following days of criticism of Boris Johnson".

Leading Tory leave campaigner, Bernard Jenkin, has also launched a highly critical intervention. He claims the gloomy outlook and "Brexit in name only" approach from the Treasury risks a successful Brexit. The former director of the Vote Leave campaign insisted that his comments were not a personal attack on Mr Hammond, who he wants to stay in the job, but it was a critique of the department and their anti-Brexit doomsayers.

It doesn't rain, it pours for the Chancellor as he faces "a bloodbath" in the public finances, along with calls for him to leave the Treasury. As much as two-thirds of the £26 billion he set aside last year as a "buffer for the economy" through the Brexit period is likely to be wiped out as weak economic forecasts potentially derail the government's plan, according to the Financial Times. The Office for Budget Responsibility, the government's fiscal watchdog, has "persistently over-estimated Britain's productivity" over the past seven years, and it will publish a more pessimistic Budget forecast to rectify the situation.

With Mrs May's conference speech featuring, amongst the coughing fit (attempted to be cured with a cough sweet from the Chancellor), segments where the Prime Minister promised to reduce the burden of debt on students and build more homes, this negative forecast could leave the Chancellor in an awkward position politically. He is also under increasing pressure to end the austerity cap on public pay.

The prospect of a hard Brexit may also damage the economy, and the Treasury along with it. Moody's, the credit ratings agency, has downgraded the UK's rating from Aa1 to Aa2, warning that the long-term health of the country's health will be affected by a hard Brexit approach. The cut in the rating was also reflective of the UK's access to the EU's single market and customs union likely being reduced. The Treasury, however, hit back, accusing Moody's of being "out of date" and said they are not complacent but "optimistic about our bright future".

As chancellor of the exchequer, Philip Hammond is essentially the pantomime villain of Westminster with the voters - but he is soon turning into this figure among his own party with Brexit-supporting backbenchers calling for Theresa May to sack him. Will the Prime Minister's political survival – or certainly a last-grasp attempt at it – come at the expense of her chancellor?

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