An emergency budget to deal with the fallout from the referendum vote to leave the EU looks unlikely to take place until the autumn, as Chancellor George Osborne said it was better to delay action to shore up the public finances until a new prime minister is in place.
In an early-morning statement at the Treasury, designed to calm market anxieties after the pound fell a further 2 per cent against the US dollar in overnight trading, Mr Osborne insisted that the UK economy is “about as strong as it could be to confront the challenge our country now faces” and said Britain remains “open for business”.
Following talks over the weekend with Bank of England Governor Mark Carney and fellow finance ministers and international economic organisations, The Chancellor said that “further well-thought through contingency plans” were ready to be deployed if needed in response to further volatility.
Mr Osborne – who has kept a low public profile since the Brexit vote – said it was “inevitable” that the UK economy would face an “adjustment” in the wake of the Brexit vote, though he steered clear of repeating explicit warnings of recession made during the referendum campaign.
Having been accused by Brexit supporters of scaremongering during the referendum campaign, Mr Osborne insisted he was not backing away from the warnings he made about the likely negative impact of a Leave vote on the economy, which the Treasury said could create a £36 billion black hole in the public finances by 2030.
“I don’t resile from any of the concerns I expressed during the campaign,” said the Chancellor. “But I fully accept the result of the referendum and will do everything I can to make it work for Britain.
“It is inevitable after Thursday’s vote that Britain’s economy is going to have to adjust to the new situation we find ourselves in.”
Mr Osborne said that volatility in the markets, which saw the pound fall to 30-year lows in the immediate aftermath of the referendum on Friday, was “likely to continue”.
And he said uncertainty would remain for “the coming months and beyond” as Britain worked out its new relationship with its European allies.
“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,” said the Chancellor. “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.
“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.
“But no-one should doubt our resolve to maintain the fiscal stability we have delivered for this country.
“To all companies large and small I would say this: the British economy is fundamentally strong, we are highly competitive and we are open for business.”
Mr Osborne said Britain must aim to establish “the strongest possible economic links with our European neighbours”, as well as with trading partners around the globe.
“I do not want Britain to turn its back on Europe or the rest of the world,” he said. “We must bring unity of spirit and purpose and condemn hatred and division wherever we see it.
“Britain is an open and tolerant country, and I will fight with everything I have to keep it so.”