September 29, 2019 / 11:06 PM / 17 days ago

UK preparing 'full armoury of economic policy' for 'no-deal' Brexit

MANCHESTER, England (Reuters) - Finance minister Sajid Javid pledged on Monday to prepare Britain for a no-deal Brexit, saying the “full armoury of economic policy” would be on hand if needed.

Britain's Chancellor of the Exchequer Sajid Javid arrives at the Conservative Party annual conference in Manchester, Britain, September 29, 2019. REUTERS/Phil Noble

Speaking at his party’s annual conference in Manchester a month before Britain is due to leave the EU, Javid said his department would prepare a comprehensive response, working with the Bank of England.

Prime Minister Boris Johnson has split parliament, his party and the electorate by promising to deliver Brexit on Oct. 31, with or without a transition agreement - at the risk of triggering shortages of food, medicine and fuel.

“I’ve tasked the Treasury with preparing a comprehensive economic response to support the economy, working closely with the Bank of England,” Javid said. “We’re ready to draw on the full armoury of economic policy if needed.”

“Deal or no deal, we will be ready.”

Treasury officials said that response would need to be set out in a budget but declined to say when that budget would happen or what it might contain - to the chagrin of the CBI business lobby group.

“It feels like there was a page missing from his speech. It was silent on how the Government and the Treasury would respond to the serious rupture caused by failing to secure a deal with the EU,” said Carolyn Fairbairn, CBI director-general.

Britain is not scheduled to hold an election until 2022, but most commentators expect one in the coming months. Johnson’s Conservatives have lost their majority in parliament and divisions over Brexit are paralysing policymaking.

The government wants an election, but its opponents in parliament have refused to endorse one until a ‘no-deal’ Brexit on Oct. 31 has been definitively ruled out.

With a campaign platform in mind, Javid tried to shift the focus to what he called “the people’s priorities” - issues that the party believes matter more to voters in the long run.

END LOW PAY

He said the government would aim to raise the so-called National Living Wage to two-thirds of median earnings - an international threshold below which workers are classed as low paid, and extend the same minimum wage to younger workers.

Javid said this would make Britain one of the first countries to end low pay.

It would take minimum pay for those aged over 21 to 10.50 pounds ($12.93) an hour, based on current forecasts - up from a current 8.21 pounds, applicable to those aged at least 25.

He estimated the move would benefit 4 million people.

The British Chambers of Commerce, another business lobby, said the increase was a laudable ambition but must be done on the basis of economic evidence, and with time for businesses to adjust.

Javid also committed 5 billion pounds to improving fast broadband access in harder-to-reach areas, announced a strategy to improve bus services, and set out how billions already set aside for road improvements will be spent.

Britain's Chancellor of the Exchequer Sajid Javid is seen outside the venue for the Conservative Party annual conference in Manchester, Britain, September 29, 2019. REUTERS/Henry Nicholls

After nearly a decade of deficit-reducing spending cuts under Conservative-led governments, the recently appointed Javid, a 49-year-old free marketeer, has promised to rewrite the rules that define spending and borrowing limits.

The new framework is expected to allow higher levels of state-funded infrastructure investment.

“We will be smart and responsible in the way we invest for the long term,” he said. “We can do this by taking advantage of incredibly low interest rates and borrowing to build, not borrowing to waste.”

Reporting by William James, Kylie MacLellan and Elizabeth Piper; editing by Gareth Jones, Larry King

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