The Guardian view on austerity economics: it failed | Editorial
There could hardly be a worse time for the economy to be starting Brexit negotiations. That thought will be uppermost in the mind of Philip Hammond when he stands up on Thursday to make the annual address by the chancellor to the City's elite at London's Mansion House. Mr Hammond has been warning of the dangers of Britain being outside both the single market and the customs union since entering 11 Downing Street last summer. Until now, his counsel has not been sought by Theresa May, and there was plenty of talk about the chancellor losing his job in a post-election reshuffle. But that was then, when the expectation was of a Conservative landslide. This is now, and Mr Hammond is unsackable at a time when the economic skies are darkening. His position has unquestionably been strengthened by the election result. The question is what the chancellor does with his newfound power.
Anything the chancellor can do to haul the UK back from the brink of a chaotic departure from the EU would certainly be welcome, but Brexit is only part of the story. Mr Hammond also needs to recognise that the economic approach of the past seven years has been a failure. None of the recent data has been good. Growth has slowed. Inflation is rising. Wages when adjusted for prices are lower than they were when the last recession began in early 2008. Britain has a cost-of-living crisis at the same time that it has a political crisis. The only reason it is not having a sterling crisis as well is because the financial markets are clinging to the hope that the inconclusive result of the election makes a softer Brexit more likely. Should that hope proved unfounded, the pound will drop sharply, adding to the squeeze on living standards.
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