Hammond: Brexit deal should not harm economy

British controls on immigration following the country’s referendum decision to leave the European Union must not be damaging for the economy, finance minister Philip Hammond was quoted as saying in the Daily Telegraph story.
Hammond told newspaper that Britain would use any new immigration powers “responsibly” in comments that could ease concerns among investors that the country might be heading for an acrimonious divorce with its main trading partners in the EU.
“We’ve got to be clear about one thing — there’s an implicit term of the mandate we received from the British people,” Hammond said in an interview with the newspaper.
“It may not have been stated explicitly but it’s implicit. And that is that they do not want to see the economy suffer.”
Britain faces the challenge of securing a new trading deal with the EU while also giving London more control over migration from the bloc, potentially falling foul of the EU’s freedom of movement principle that is key for accessing its single market.
The value of sterling, which tumbled more than 10 percent against the US dollar and the euro after the Brexit vote in June, has weakened in recent days on concerns among investors that Britain might be heading for a “hard” exit from the EU.
Japanese carmaker Nissan said this week it was worried about potential barriers to its exports from the country after the decision to leave the EU.
“The message that I want to send to business is that whatever solution we end up, whatever control powers we have over immigration into the UK, we will use them responsibly,” Hammond told the Daily Telegraph.
“We will use them in a way that supports the UK economy and we will certainly not use them to shut out highly-skilled people — whether they are bankers or software engineers or managers in global companies — out from the UK when their presence is supporting inward investment and growth in our economy.”

The Office for National Statistics, meanwhile, said Britain’s giant services sector grew strongly in July, according to official data giving the clearest sign to date that the economy did not slump immediately into a major slowdown after the country’s vote in June to leave the EU.
It also said economic growth was stronger than it previously thought in the run-up to the June 23 referendum as consumers and businesses increased their spending, despite the approach of the vote.
“Together this fresh data tends to support the view that there has been no sign of an immediate shock to the economy, although the full picture will continue to emerge,” ONS statistician Darren Morgan said.
The data may dissuade the Bank of England from following through on its plan to cut interest rates again at its next meeting, though the economy still looks set to slow sharply next year when the full impact of the referendum is likely to be felt.
Samuel Tombs, an economist with Pantheon Macroeconomics, said there was now “considerable doubt” about the likelihood of a rate cut in November.
Hammond is also weighing up whether he needs to bolster the economy via higher spending or lower taxes when he delivers his first budget plans on Nov. 23.
“The UK started the year in a position of economic strength, and we can see today that this momentum has continued in the services sector — the largest part of our economy,” Hammond said after the release of the data.
“We want to build on this strength as we forge a new relationship with the EU and deliver an economy that works for all. The UK is well-positioned to deal with the challenges, and take advantage of the opportunities, that lie ahead.”
Howard Archer, an economist at IHS Markit, said he was raising his estimate for growth in the third quarter 0.4 percent from 0.3 percent, and also revising up his view of 2017.
Less comprehensive surveys of purchasing managers had previously suggested that the services sector sagged in July before bouncing back strongly in August.
But the ONS said output in the services sector grew by 0.4 percent compared with June, better than many economists had anticipated, and was up 2.9 percent in year-on-year terms.

Source: Arab News