Hammond Slams U.K. Labour's `Dangerous Ideology' on Economy
(Bloomberg) -- U.K. Chancellor of the Exchequer Philip Hammond will denounce the opposition Labour Party’s “dangerous” ideology and reiterate a commitment to the free market in a bid to regain the confidence of business leaders disillusioned by the government’s infighting and handling of Brexit.
In a speech to party faithful in Manchester, northern England, on Monday, the chancellor will say the British economy is “fundamentally strong.”
And while conceding that the market has its failings, Hammond will promise that the Tory government will make the next generation better off, stressing free enterprise as the key to financing public services and improving living standards.
“As this model comes under renewed assault, we must not be afraid to defend it,” he will tell the Tories’ annual conference, according to remarks released by his office. “While no one suggests a market economy is perfect, it is the best system yet designed for making people steadily better off over time and underpinning strong and sustainable public services for everyone.”
Hammond’s speech marks the latest effort by the Conservative government –- much criticized last year for taking a swipe at global elites -- to dominate the economic and business argument after Labour, led by Jeremy Corbyn, described itself as a “government in waiting” at its own party conference last week.
"It’s an argument between nostalgic idealism on Corbyn’s part and pragmatism on our part," Hammond told ITV’s "Good Morning Britain" program. "Every country except North Korea, Venezuela, Cuba and Zimbabwe has adopted that system. What he’s offering them is an illusion, a pretense."
On Thursday, Prime Minister Theresa May defended free markets as the greatest “agent of progress.” Her office has made itself more receptive to the concerns of business leaders since June’s disastrous election, in which she lost her parliamentary majority.
The chancellor will contrast his vision for the economy with that of his Labour counterpart, John McDonnell. The shadow chancellor alarmed the business community last week by promising to take back under government control private finance initiatives used to fund public-sector spending. He reiterated a pledge to nationalize railways and utility companies, and talked openly about preparing for a run on the pound when Labour comes to power.
Business groups have warned they’re growing impatient with the government’s infighting over Brexit, and called on the Tories to win back companies’ confidence to help boost investment.
“Public disagreements between cabinet ministers in recent weeks have only served to undermine business confidence, not just on Brexit negotiations, but also on the many issues where firms need to see clear action from government closer to home,” British Chambers of Commerce Director General Adam Marshall said in an emailed statement.
Marshall also renewed calls for a Brexit transition period of at least three years, in contrast to the two years promised by May and insisted upon by some of her ministers.
“We are the party of progress,” Hammond will say. “The party that makes a clear commitment to the next generation -- that they will be better off than us, and that their children will be better off again than them. This is the Conservative definition of progress and I pledge to the next generation: we will not let you down.”
Hammond will also confirm a 300 million-pound ($400 million) investment to connect cities to the planned HS2 high-speed rail route, reducing travel times between centers such as Liverpool, Manchester, Sheffield, Leeds, York and Leicester. A further 100 million pounds will be committed for 33 new road projects in the north of England.