UK Chancellor: Brexit deal ‘dividend’ if MPs can agree a way forward

Philip Hammond urges MPs to “build a consensus” for a deal as he delivers his spring budget statement.

LONDON — U.K. Chancellor Philip Hammond hinted at a major boost in public spending plans within months of leaving the EU if the country can exit with a deal.

Delivering his spring budget statement today, after MPs once again rejected Prime Minister Theresa May’s Brexit deal, Hammond said that if the U.K. could leave the EU with an agreement, it would see “a deal dividend” for the British economy, fueled by renewed business confidence and investment, and the release of financial reserves he has set aside to guard against the risk of an economically disruptive no-deal Brexit.

Hammond, one of the Cabinet’s chief advocates of a close economic relationship with the EU after Brexit, said that to leave with no deal would lead to higher unemployment, lower wages and higher prices for consumers.

“The progress we have made will be at risk if we cannot secure a smooth and orderly exit from the EU,” Hammond said. “Leaving with no deal would mean significant disruption in the short and medium term and a smaller, less prosperous economy in the long term … high unemployment, lower wages, higher prices in the shops. That is not what the British people voted for in June 2016.”

He hinted at a stimulus package to shore up the economy in such a scenario, but warned that any “monetary response” would have to be carefully planned to avoid exacerbating inflation caused by a likely devaluing of the pound.

Growth has slowed in recent months, in part because of “heightened uncertainty related to Brexit” — Office for Budget Responsibility

However, if the U.K. were to leave with a deal, Hammond pledged to launch a three-year spending review before the summer, with a focus on funding for the “public’s priorities” including social care, schools and police.

In this scenario, the chancellor said the country would be able to choose how much of the “deal dividend” to spend on public services. He said the government has “headroom” of £26.6 billion above its “fiscal mandate,” which requires the budget deficit to be below 2 percent of GDP by 2020-21, and it’s likely that some of this could be released to fund new spending priorities.

He claimed the spending would mark “an end to austerity” — a totemic pledge that May committed to in her Conservative Party conference speech last year.

He urged MPs to start “building a consensus” for a deal across the House of Commons.

This evening MPs will vote on whether they are prepared to see the U.K. leave the EU without a deal on the current legal date of March 29. If no-deal is rejected, MPs will vote on Thursday on whether they want May to seek an extension of the Article 50 negotiating period, delaying Brexit.

Hammond earmarked Thursday’s vote as the start of the process toward the Commons agreeing “a deal we can collectively support to exit the EU in an orderly way.”

In their economic forecast published alongside Hammond’s statement, the independent Office for Budget Responsibility projected that U.K. GDP would grow 1.2 percent in 2019, with growth settling at around 1.5 percent per year in the medium term. However, the forecast could not take into full account the unknown impact of a potential no-deal Brexit. Growth has slowed in recent months, in part because of “heightened uncertainty related to Brexit,” they said.

Besides Brexit, Hammond used his statement to set out a range of measures to encourage lower carbon emissions and boost biodiversity. He also announced an additional £100 million in funding for police to help combat a recent, widely discussed rise in knife crime in the U.K.

This article has been updated.

This article is part of POLITICO’s premium Brexit service for professionals: Brexit Pro. To test our our expert policy coverage of the implications and next steps per industry, email pro@politico.eu for a complimentary trial.


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Interview. Sharma – “Every foreign investor I met thought leaving the EU would present significantly more opportunities for bilateral trade.”

The Employment Minister embodies two reasons why the Government is still afloat – its jobs creation record and under-reported Ministerial loyalty.

It can be hard to understand, from the news coverage, why this Government has not actually fallen to bits.

Alok Sharma, Minister of State for Employment, discusses in this interview two factors in its survival which are easy to underestimate or overlook. One is the creation since 2010 of an additional 3.75 million jobs.

The other is the loyalty which he and other highly competent, upwardly mobile, not widely known ministers demonstrate towards Theresa May. Sharma says here that  “history will judge her very kindly”.

When asked at the end of the interview whether his departmental head, Amber Rudd, should be sacked for blackmailing the Prime Minister, Sharma replies that everyone’s focus should be on getting the Prime Minister’s deal over the line, after which the party must come back together and concentrate on things which matter more than Brexit to the voters.

The interview took place in idyllic weather yesterday afternoon on the Terrace of the House of Commons, with Sharma offering not just tea but cake.

ConHome: “The late, great Gerry Fitt, drinking gin and tonic here in the evening, used to shout to the boatloads of passing tourists, “It’s all free, you know.”

Sharma: “You can’t imagine anyone doing that now.”

ConHome: “No. A very brave man, Gerry Fitt. On the employment side, why is employment so high? No one can quite understand it. It’s been going on for quite a long time.”

Sharma: “I think it is actually down to the policies we’ve been pursuing since 2010. Britain is one of the most business-friendly places in the world.

“And if you look at the jobs that have been created, in the private sector there are 3.75 million more people in work now than in 2010, which is pretty remarkable.

“And I think the policies we’ve followed in terms of low corporation tax, R&D tax credits, there’s a whole range of these business-friendly policies that have been followed that I think have helped with this.

“And I think there is this underlying belief in the British economy as well.

“And there’s always this discussion about what kind of jobs these are. Since 2010, of all the jobs that have been created, 75 per cent of them are full-time, they’re permanent and in higher-level occupations.

“And then the question is what does that mean in terms of higher level occupations. The median level of people who are considered to be in higher level occupations, they will have salaries between 30 and 40,000 pounds a year, or indeed higher.

“That, I think, says quite a lot about the strength of the economy and the confidence of employers to go on employing people and investing.

“It’s interesting that this particular trend has now been continuing for a long period of time. I’d like to think it’s only since I became Minister for Employment.”

ConHome: “Just over a year, you’ve done?”

Sharma: “Just over a year, yes.”

ConHome: “What have you managed to contribute to this, then?”

Sharma: “There’s this realisation that we’ve got very high levels of employment. The discussion then turns to wages. What I think has been very encouraging is that for the last 11 months in a row wages have been outpacing inflation.

“I hope what we’ve now seen is this fundamental shift where wages will continue to outpace inflation.”

ConHome: “Why are vacancies also high? But perhaps that’s a different way of asking the same question.”

Sharma: “One way of looking at it is there is a huge amount of confidence in the economy. Employers are willing to create those jobs.

“I think the key thing for us as a Government is that we continue to provide training and support for people in the workplace. Youth unemployment is a really interesting stat.”

A member of his staff arrived with two cups of tea.

“And the cake?” Sharma said.

Staff member: “I thought that was a joke.”

Sharma: “No it wasn’t a joke. Would you like some cake? I think we could do with some cake.”

ConHome: “I wouldn’t mind some cake, actually. Unless you feel I’m the kind of person who’s had far too much cake lately.”

Sharma: “Some chocolate cake would be nice. It’s teatime.”

Staff member: “Any allergies?”

ConHome: “You’re trying to protect us from ourselves.”

Sharma: “Youth unemployment has almost halved since 2010. One of the things that I’ve been very keen on is encouraging the use of mentoring.

“A lot of the people that we had from employers who were doing the mentoring, many of them were from similar backgrounds to those they were mentoring, and actually for a young person to look and say, ‘Well, do you know, I could get there, because this individual did’, I think that’s really, really powerful.”

ConHome: “Is there anything in the accusation that business still prefers cheap labour to automation, which is why our productivity is not as good as it should be”

Sharma: “Well I think automation is something that is part of life these days, and I think what a lot of business will be looking at is doing things more efficiently.

“If you look at the tech sector, I think we’ve seen the highest level of growth of any sector since 2010 in terms of numbers of jobs, and these won’t necessarily be low-paid jobs. Many of them will be well-paid jobs.”

ConHome: “You’ve spoken of this great underlying confidence in the economy, but is the value of the pound also rising because the markets reckon Jeremy Corbyn, because of the considerable problems within the Labour Party, is becoming less likely to become Prime Minister and wreck everything?”

Sharma: “There is no doubt that one of the things that does concern certainly some of the people I talk to in the finance sector, in industry…”

ConHome: “You were a banker for 16 years.”

Sharma: “Yes I was. Before that I qualified as an accountant.”

ConHome: “Before that you were an engineer.”

Sharma: “Well I worked for an outfit called Miles Electronics which was part of the Mars Group. But I think people are pretty concerned about what the impact of a Corbyn government would mean on investment, what it would mean in terms of votes.

“Personally I think it would be an absolute disaster. And I’m not just saying that because I’m a Conservative. I think that’s a widely held view by very many people, that Jeremy Corbyn running the country would be pretty bad news for Britain.”

ConHome: “Would a delay in Brexit be bad news?”

Sharma: “Well the Government policy is pretty clear, and I support it. Which is that we are working to get a deal and we want to have that done by the 29th of March.

“I support that policy, I support the Prime Minister, and I think she’s been very clear that we need to be focussing on that particular issue first and foremost.

“She’s understood clearly from the votes we’ve had here that changes to the backstop are going to be very important for very many colleagues, and that’s what she and other colleagues are working towards bringing back.”

ConHome: “Do you think No Deal should be taken off the table?”

Sharma: “Well we can get into the permutations…”

ConHome: Your colleague David Lidington is dealing with them in the House at the moment, it seems very successfully.

“I spent about an hour in there. There was an incredibly good mood, he’d taken an amazing number of interventions, Oliver Letwin said he was very happy, Yvette Cooper seemed relatively content, the Chief Whip was having a friendly chat with Ken Clarke, Jacob Rees-Mogg was sharing a joke with Simon Hoare.”

Sharma: “What I think all colleagues recognise, whichever wing of the party they are in, is that we need to respect the referendum. I voted and campaigned for Remain very strongly.

“But I also said very clearly at the time that whatever the outcome of the national referendum I would respect it, and that’s what we need to do. And I think that anything else would not be good news for democracy.”

ConHome: “Were you surprised by the result?”

Sharma: “I was surprised by the result. I was disheartened for a period of time. But actually straight after that, when Theresa May became Prime Minister, I became Minister for Asia and the Pacific, and I spent literally every other week getting on a plane to Asia on a Wednesday and coming back on a Sunday.

“The interesting thing was that absolutely every single government and every single foreign investor that I met thought that us leaving the European Union would present significantly more opportunities for bilateral trade and investment.”

ConHome: “Your wife is from Sweden. Was she very worried by the whole thing?”

Sharma: “Well interestingly, no. She has absolute confidence that things will work out. And she has a pretty British way of thinking on these matters.”

ConHome: “By that do you mean phlegmatic? Calm?”

Sharma: “I think calm. Calm and understated.”

ConHome: “You wrote a piece for ConHome during the leadership contest in 2016, saying you thought Theresa May would be very successful because of her judgment and decision-making.”

Sharma: “I think the Prime Minister has done a remarkable job. Let’s be honest, the result in 2017 wasn’t one that any Conservative wanted.

“But I think that the resilience the Prime Minister has shown has really been quite remarkable. And she has faced brickbats from all sides, but she continues. I think actually history will judge her very kindly.

“What we now need to do, of course, is collectively support her, so we can get this deal over the line, and then actually what is really important after that is we get back and focus on all the other issues that really matter to our constituents.

“It could be potholes, issues around access to GP surgeries, issues around housing. Come the next general election, which I very much hope will be in 2022, we will be judged not just on the outcome of Brexit, but actually what we have done in terms of making people’s lives better.”

ConHome: “You’ve been very loyal to this Prime Minister. Maybe it’s an underreported thing, because obviously if someone threatens to resign it’s a story.

“But if you go and tell your news editor that Alok Sharma is remaining very loyal…”

Sharma: “…it’s not news.”

ConHome: “It’s taken for granted. Presumably you’re hoping in due course to rise to Cabinet rank?”

Sharma: “I think everyone who comes into politics, certainly colleagues that I talk to, they will be coming into politics because they want to bring about positive change.

“And clearly if you’ve been a junior minister the opportunity to run your own department is something that I think most colleagues would look forward to. But I mean that’s a matter for the Prime Minister rather than for me.

“What I want to be judged on right now is the work that I’m doing on the welfare reform, which is incredibly important, the work we’re doing in terms of Universal Credit.”

ConHome: “Is that going on all right?”

Sharma: “Universal Credit is certainly in the news a lot. I think it’s worth pointing out that whenever we talk about Universal Credit we need to look at what it has replaced.

“Any parliamentary colleague who has been around for a while will have dealt with constituents who have been on legacy benefits, six different benefits delivered by three different agencies of government.

“We have simplified the process. Along the way we have made changes, we have learned, adapted, and in the last two Budgets an extra six billion pounds has gone in to support people.

“I want to make sure that absolutely every single person who has an interaction with Universal Benefit has a positive outcome. We need to make sure the system delivers that.

“For the first time you’ve got these individuals called work coaches who work in the Job Centres who are able to provide one-to-one support.

“We’ve got to continue to adapt, change, make the system better. At the end of the day we need to have a really compassionate system which is sustainable but above all people are being helped into work or better paid work.”

ConHome: “David Cameron and George Osborne used to go on and on about ‘our long-term economic plan’, and so were backbenchers. Is the present government doing enough of that?

“During the general election, the Chancellor wasn’t really used, or indeed any other big economic spokespeople.”

Sharma: “Well I think there will be lots of lessons that we will have learned from the last general election. The issue right now is that so much bandwidth is taken up with Brexit that some of these stories aren’t going to be front-page news.”

ConHome: “Hasn’t your departmental boss [Amber Rudd] got away with blackmailing the Prime Minister and shouldn’t she be fired?”

Sharma: “An easy one there. Look, I think what’s really quite important is to focus on delivering this deal. The Prime Minister set out the case on Tuesday in another statement to the House, and what is key is once we’ve got this deal over the line we’re going to have to come back together as a party.

“And Brexit has been a divisive issue for all political parties, and across the country. We need to be generous, big-hearted with each other, come together after this, but we will only be able to do that if we help the Prime Minister to get this deal over the line, and that’s certainly what I’m focussed on.”

The cake, incidentally, arrived, and was excellent.

Stephen Booth: Brexit and the economy. There are ups, there are downs. But whatever happens, our fundamentals remain strong.

A flexible labour market, a well-regarded legal system, and comparatively favourable demographics relative to the major European economies are all valuable assets.

Stephen Booth is Director of Policy and Research at Open Europe.

As the ongoing Brexit saga continues to drag towards the 29th March without resolution, every announcement or scrap of economic news is greeted by hard-line Remainers or Brexiters as proof positive of their arguments. Nuance is no use to either extreme in this debate. In reality, since the referendum, there have been positives and negatives but, overall, the economy has held up relatively well compared with the political wreckage that Brexit has been causing in Westminster.

After retail sales figures outstripped forecasts in January, the consultancy Oliver Wyman suggested the reason for this pleasant surprise was that consumers might be stockpiling for a No Deal Brexit. This might have tallied had the boost been attributed to a spike in the purchase of tinned baked beans, but Office of National Statistics figures illustrated that sales of discounted clothing were the biggest driver. Are we really stockpiling jumpers?

Japanese carmaker Honda’s decision last week to close its Swindon plant provided the latest opportunity to confirm our prejudices. Some rushed to cite Brexit as the cause, before Takahiro Hachigo, Honda’s chief executive, stated that “Brexit was not taken into account” in the decision. Moves towards emissions-free vehicles, over capacity at the Swindon plant and the removal of tariffs under a new EU-Japan trade deal seem to be the prime reasons for the closure. After all, Honda is not closing its UK plant in favour of another location inside the EU market, or another European country with more certain access to it. Indeed, it is also closing its plant in Turkey, which has a customs union with the EU.

However, Brexiters should not take comfort from this episode. Rightly or wrongly, many outside the UK see Brexit as damaging to “Brand Britain”. Equally, it is very hard for companies like Honda to “blame” Brexit because they risk a consumer backlash. Blithely dismissing businesses’ legitimate concerns about uncertainty or the impact of a No Deal Brexit as a rerun of “Project Fear” does nothing to dispel this instinct. Even if only a minor contributing factor, Brexit uncertainty was a very useful excuse, at the very least, for Honda to pull the plug in Britain. To reiterate the degree of uncertainty facing businesses, we are just five weeks away from a potential No Deal Brexit and we are still eagerly awaiting an announcement of what tariffs the government intends to levy on imports from all over the world.

Ultimately, each isolated case is complicated and can only tell us so much. The wider reality is that, in 2016 and 2017, UK growth was sluggish in comparison to the global upswing. But in its January forecast, the IMF forecasts that, following an orderly Brexit, the UK growth rate will converge with France and Germany at around 1.5 per cent in 2019 and 2020. The European Commission expects the UK to marginally outpace Germany in 2019.

According to Gertjan Vlieghe, an External Member of the Bank’s Monetary Policy Committee, the reason for the UK’s comparative underperformance is that while business investment has grown strongly across the G7, it has stalled in Britain. Given the seismic nature of the Brexit vote and the political fallout it would be surprising if many businesses weren’t hesitant to invest. Getting a deal through which provides for an orderly Brexit might unlock some pent-up investment. However, it is difficult to see how a No Deal Brexit or Article 50 extension in the hope of a second referendum would provide businesses with the confidence they crave.

On the other hand, despite a weakening of the pound, consumer spending has on the whole remained buoyant and reflects the UK’s strong labour market performance. Employment is at record high levels, and wages are rising faster than inflation. The Government recently posted its largest January revenue surplus since records began in 1993.

Looking to the longer term, the UK’s economic fundamentals remain strong. A flexible labour market, a well-regarded legal system, and comparatively favourable demographics relative to the major European economies are all valuable assets. In and of itself, Brexit will not be a life or death matter for the economy. As consumers and supply chains adjust to whatever new trade barriers arise on both sides of the Channel, there will be winners and losers. This is the inevitable reality of altering years of deep economic integration.

However, onlookers and potential foreign investors might wonder whether the fundamentals of our politics are as sound. Parliament has so far been found desperately wanting in what is only the first stage of Brexit. Many MPs on either side are still intent on debating Brexit as a matter of principle rather than pragmatism, two-and-a-half years after the referendum campaign. There must be major doubts about their ability to wrestle with the real-world challenges and decisions required to reshape Britain for the big, wide world outside the EU.

Mark Harper: The reforms we need to make to the Apprenticeship Levy, Further Education and student funding

Shifting the focus to FE is not only the right thing to do, but would send a powerful message. We should ensure that the most disadvantaged have the skills to enter the workforce.

Mark Harper is a former Chief Whip, and MP for the Forest of Dean.

The EU referendum was a vote for change, and it is for politicians to listen and act accordingly. Some of the research into the result has shown that many Leave voters felt that globalisation had not delivered good outcomes and opportunities for them – and that they wanted to see change.

One policy area we should look at is how to equip young people and adults, in every part of our country, to respond to the modern world of work and keep their skills up to date. This will enable them to get and retain good, well-paying jobs and ensure they reach their full potential.

The introduction of T-Levels (a technical alternative to A-Levels) is an important step in providing young people with high quality routes beyond university. I am pleased that the Government is sticking to 2020 as the start date for delivering T-Levels. The success of these qualifications will depend on whether employers value them.

I hope that the Government will work with employer organisations, such as the Confederation of British Industry, British Chambers of Commerce and the Federation of Small Businesses to advise the business community about the value of T-Levels. Small and medium enterprises should be properly engaged through their trusted advisors such as accountants, solicitors and business bank managers to ensure the message reaches everyone.

Apprenticeships are the gold standard in technical education. The Government has rightly reformed apprenticeships in order both to increase the quality and quantity available. Recent data showed that almost half of apprenticeships were of the ‘standards’ type, compared to just five per cent the year before. Apprenticeship standards are seen to be better than frameworks because they are employer-designed.

However, since the apprenticeship levy was introduced, the number of apprenticeship starts has fallen. Therefore, we need to change how the levy operates. Many businesses have said they plan to treat the levy as a ‘tax’, which defeats the purpose of the policy. There should be greater flexibility for levy account holders in how they use their funds, including the ability to pass on levy funds down a supply chain, and also for companies to collaborate with other levy payers to plug local skills gaps. There would also be merit in using dormant levy account funds to support the roll-out in T-Levels.

According to the House of Commons Library, the new national funding formula for schools includes a minimum funding level per secondary school student of £4,600 in 2018-19 and £4,800 in 2019-20. The maximum university tuition fee for 2018-19 is £9,250. By comparison, the national per student funding rate in the 16-19 funding formula is set to remain at £4,000 until at least 2019-20.

The Institute for Fiscal Studies has concluded that “16-18 education in England has been the big loser from education spending changes over the last 25 years”. The introduction of T-Levels and the reform of apprenticeships will ensure that technical education is held in the same esteem as more academic courses of study. Increasing Further Education (FE) funding would tell employers and students that the FE route is neither second class nor just a ‘second chance’ but a viable and valuable route in itself.

English universities are being sufficiently funded, participation rates keep increasing and more disadvantaged students are going to university in England than ever before. However, there are further reforms which should be made.

First, we should use the CPI measure of inflation, not RPI, to calculate student loan interest rates. The Office for National Statistics says of RPI that ‘we do not think it is a good measure of inflation and discourage its use’. This change would have the benefit of reducing the headline interest rate.

Second, the Government should support students who are not supported by their parents to go to university, but are not eligible for the maximum maintenance loan of £8,200. I believe that maintenance loans are designed to contribute to a student’s living costs, and students are expected to supplement them through either employment or parental support. Allowing students to apply for an increased loan if their parents are unwilling to make any financial contribution would empower them to make their own decisions about their education.

Third, the Government should improve the way in which it communicates about student loans. The student loan system is more akin to a graduate tax, and this should be made clear. The IFS estimated that the average loan subsidy per student amounts to just over £17,000, and the lowest-earning 10 per cent of graduates receive a subsidy of 93 per cent (£36,481 on average). A degree is of benefit to the holder and society, which is why the responsibility is currently shared between the individual and the taxpayer.

Shifting the focus to FE is not only the right thing to do, but would send a powerful message. Whilst Labour is pushing for the abolition of tuition fees, which ultimately benefits the most privileged parts of society-graduates, the Conservatives would be ensuring that the most disadvantaged have the skills to enter the workforce and keep their skills up to date, in line with changes in the world of work.

James Frayne: Might the UK see its own Yellow Vest uprising?

Let us hope not. It’s unlikely, but not completely impossible. The Government must battle four trends to reduce the risk.

James Frayne is Director of Public First and author of Meet the People, a guide to moving public opinion.

We should hope not – violent protest is the last thing we want to see – but could there be the equivalent of a Yellow Vest uprising in the UK? An aggressive, popular campaign against higher taxes, poor services and declining living standards? The closest reasonably recent parallel here was the fuel protests of 2000. But could we see something broader, like we’ve seen in France?

It’s generally a mistake to think you can translate one country’s political, economic and social culture to your own. British people have thankfully (usually) shunned direct, highly confrontational protests; and French politics and government administration are very different. But the Yellow Vest movement is interesting because the issues raised and the language used are similar to those that have been used by protest campaigns here in the last 20 years.

In France, working class and lower middle class people have come together to complain about rising taxes, especially fuel taxes, apparently out of touch elites making decisions that hit them hard in the pocket, and the decline of universal public services. People are right to point out there is no coherent political ideology behind the movement (although, perhaps it would be more accurate to say it doesn’t look coherent to those that think of politics on a classic left-right continuum). But the issues raised are not dissimilar to those that have been raised by fuel protesters, early UKIP campaigners, independent Mayors, and, of course the TaxPayers’ Alliance.

So, could the Yellow Vests arrive here? With the organising power of the internet available to all, you can never say for sure, but it seems unlikely for the foreseeable future. This is for two main reasons. Firstly, most of the working class and lower middle class are only now approaching their upper limits on tax. Many have been saying they’d be happy to pay more tax if they knew it would be ringfenced for the NHS, for example. And, consequently, the polls suggest they supported the Government’s announcement for £20 billion in new spending.

The second reason is that they know that this Government is keeping Jeremy Corbyn out of power. They know, therefore, that this Government is keeping taxes relatively lower than they would otherwise be – and they also (for now at least) doubt Corbyn’s ability to run public services effectively. They still doubt his leadership abilities and his general competence. It’s hard to generate anger against a sitting Government when you know the financial alternative would likely be worse.

But we’re not a million miles away. For such a movement to become viable, four trends would need to continue. The first is that there would need to be a big increase in irritation with spending on unreformed services. While the public gave the Government’s higher NHS spending their support, a giant caveat was attached. This was the clear warning that it had better work and that the NHS had better sort waste and mismanagement out. In focus groups on this issue around the time of the announcement, people were expressing their deep concern about NHS waste. If this spending does appear to go to waste, a backlash is possible.

The second trend is for Government to continue to charge people for services they once considered theirs “by right”. The anger directed at the Conservative Party at the last election over social care is an example of this phenomenon. People hate being made to pay for things that were previously “free”. For Londoners, the introduction of the new Ultra Low Emission Zone might fall into this category. Although it’s a Labour policy, it remains to be seen whether the Government will take some of the blame for “not stopping it”.

Thirdly, the cost of living would need to continue to rise – with significant, visible rises apparently marking a change, rather than a continued gentle increase. One thing the Government will be keeping an eye on is a possible increase in heating bills in early Spring. This might see an uptick and would irritate massively, particularly against the backdrop of a cold winter.

The fourth trend is for a continued disaffection with the political class. This has been developing for two decades now and it bubbles up to the surface occasionally. If a big chunk of the public – and the majority of working class voters – think that politicians have betrayed them on Brexit, they are likely to be much more open to direct protest than they were in the past. Even if we end up leaving the EU in a way that is acceptable to these Leave voters, it’s not impossible they will have concluded that it all happened despite the best efforts of much of the political class.

It’s a reasonable bet that political activists in the UK will try to artificially create a Yellow Vest movement here; it wouldn’t be a shock to see them appear, literally, on a small scale soon. But several things will have to happen before we see a mass movement. As you can see, it’s possible that we will be in such a place at some point. We should hope that the Government takes action to avert such a movement ever gaining ground.

Howard Flight: The best part of a week on, we can see that last week’s Budget was a popular one

The Chancellor has been fortunate that the public finances have improved substantially at a particularly convenient time.

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

Philip Hammond has been fortunate that the public finances have improved substantially at a particularly convenient time. Economic growth has been revised up next year to 1.6 per cent; employment has been revised up, with 800,000 more jobs than forecast in 2023; wages will rise above inflation for the next five years.

The borrowing target has been met three years early, with the deficit now down to 1.9 per cent of GDP. The debt target has also been met three years early at a peak of 85 per cent of GDP. Borrowing is £11.6 billion lower than forecast at 1.2 per cent of GDP. This has improved significantly the scope of what the Budget can seek to address.

Overall public spending will increase by 1.2 per cent per annum, between 0.2 per cent and 0.4 per cent less than forecast growth. The improved tax yields have enabled the Prime Minister’s NHS commitment to be fully funded.

The Chancellor presented a pragmatic “micro” Budget, seeking to address virtually all of the issues which came up as needing attention. Yet perhaps its most important ingredient was a significant cut in taxation for the majority next April – increasing the personal allowance to £12,500 and the higher rate to £50,000 a year.

Local Authorities are getting an extra £1 billion of funding and business rates for retailers with rateable values below £51,000, will be cut by a third for two years. A further £1.7 billion each year will be provided to benefit working families on Universal Credit with the work allowance – the amount families can earn before losing credits – being increased by £1000 per annum.

A new two per cent digital services tax to insure that large digital firms pay a “fair share” of tax, is expected to raise £400 million per annum. Schools will get a further 400 million this year and defence will get a further £1 billion this year and next. There is also £160 million for counter-terror police. The national living wage will increase by nearly five per cent to £8.21. The national productivity investment fund will be increased to £37 billion and will be extended to 2024. Large roads will get £28.8 billion for 2020-25, and even potholes will get £420 million! PFI will be abolished, leaving a bill for £200 billion to be honoured.

There was a range of extra funding largely for small business – extending the annual investment allowance to £1 million; extending the start-up loans programme for 10,000 entrepreneurs; delivering the lowest corporation tax rate in the G20; keeping three million small businesses out of VAT; reducing the cost of taking on apprentices by halving the co-investment rate for non-levy payers; £121 million to support cutting-edge digital manufacturing; £78 million to fund electric motor innovations; £315 million in quantum technologies and £50 million for new Turing Fellowships.

Measures to help more people into home ownership include abolishing stamp duty retrospectively for first time buyers of all shared ownership properties of up to £500,000; an additional £500 million for the housing infrastructure fund; committing over £7.2 billion to a new help to buy equity loan scheme to support 110,000 new home buyers and the abolition of the housing revenue account cap controlling local authority borrowing for house building.

There are measures for those keen on the environment and more money for the Transforming Cities fund. Remarkably, the Chancellor has addressed virtually all the issues of concern to citizens and, as a result, I think, the best part of a week on, that this has proved to be a very popular Budget. The one important reform it has not addressed is the confiscatory rates of stamp duty on larger properties in London and the South East. This had led to a freezing up of the market – bad for revenues and for economic mobility.