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BoE ‘will take first steps to steer economy’

International Business
Wed, 20 Jul 2016

London: British finance minister Philip Hammond said yesterday the Bank of England (BoE) would take the first steps to help steer the economy through its Brexit shock, and possible budget measures would not come until later this year.

Hammond, who was named as chancellor of the exchequer by Prime Minister Theresa May last week, also declined to confirm whether he would follow through on his predecessor George Osborne’s plan to make further cuts to corporation tax.

In a question-and-answer session with legislators, Hammond said the central bank would take any immediate action to alleviate Britain’s Brexit slowdown, while he would spell out new fiscal plans in the autumn.

“The initial response to this kind of a shock must be a monetary response delivered by the Bank of England,” Hammond said. “And the governor, in announcing that interest rates were not to be lowered last week, did make it clear that the bank is developing a monetary package that it will announce in due course.”

In his remarks to parliament, Hammond said Britain needed a new framework to tackle its budget deficit, which he said was “very large” and needed to be addressed.

Britain’s budget deficit stands at around 4pc of gross domestic product, down from more than 10pc in 2010 but still among the largest of rich nations around the world.

Asked whether he would stick with a proposal made by Osborne shortly after the referendum to lower Britain’s corporation tax rate to below 15pc, Hammond said his focus would be to boost business investment.

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