Chancellor George Osborne has attempted to quash economic uncertainty in his first speech following the UK’s historic decision to leave the European Union (EU).
However, he admitted that there will be a delay on major action to address the impact on the economy and public finances until autumn when the new prime minister is expected to be in place.
“It is already evident that as a result of Thursday’s decision, some firms are continuing to pause their decisions to invest, or to hire people. As I said before the referendum, this will have an impact on the economy and the public finances – and there will need to be action to address that,” he said.
“Given the delay in triggering article 50 and the prime minister’s decision to hand over to a successor, it is sensible that decisions on what that action should consist of should wait for the OBR (Office for Budget Responsibility) to assess the economy in the autumn, and for the new prime minister to be in place.”
The delay in action from the chancellor will do little to allay concerns about the possible impact on major infrastructure projects like High Speed 2 and Crossrail 2, as well as privately-funded schemes like Hinkley Point C.
Osborne acknowledged that while he had wanted to remain part of the European Union (EU), the focus must now be on confronting the challenge the country faces.
“Now the people have spoken and we, in this democracy, must all accept that result and deliver on their instructions,” he said.
“I don’t resile from any of the concerns I expressed during the campaign, but I fully accept the result of the referendum and will do everything I can to make it work for Britain.”
Brexit – top three priorities:
- Volatility in the financial markets – Osborne admitted that the financial markets may not have expected the referendum result, but insisted that the Treasury, the Bank of England, and the Financial Conduct Authority have spent the last few months preparing contingency plans. “The Bank of England stands ready to provide £250bn of funds, through its normal facilities, to continue to support banks and the smooth functioning of markets,” he said.
- Uncertainty ahead of Brexit negotiations – while insisting that any major decisions to deal with the impact of market uncertainty should be deferred until the new prime minister is in place, Osborne said that the triggering of article 50 – the document which outlines how an EU country might leave the union – should only be undertaken when the UK has a clear view of what new arrangement it is seeking with its European neighbours. “In the meantime, and during the negotiations that will follow, there will be no change to people’s rights to travel and work, and to the way our goods and services are traded, or to the way our economy and financial system is regulated,” he said.
- Long-term relationship with Europe – perhaps the toughest challenge ahead, successful negotiation of a long-term economic relationship with the rest of Europe will be key to ensuring the best possible terms of trade in goods and services. “Together, my colleagues in the government, the Conservative Party and in Parliament will have to determine what those terms should be – and we’ll have to negotiate with our European friends to agree them,” said Osborne. “I intend to play an active part in that debate – for I want this great trading nation of ours to put in place the strongest possible economic links with our European neighbours, with our close friends in North America and the Commonwealth, and our important partners like China and India.”