Published: Thu, July 14, 2016
Economy | By Melissa Porter

George Osborne to return to the backbenches as Philip Hammond becomes chancellor

Referring to Osborne's "scaremongering" following the Brexit result, Reid stated: "He said there was going to be this apocalyptic emergency budget and that the economy would go to hell in a handcart".

Mr Hammond, who became the new Chancellor on Wednesday, said though the Brexit vote had had a chilling effect on the economy, he would not implement an emergency budget, as Mr Osborne had promised.

Businesses "want to know on what terms they will be able to sell into the single market of the European Union once Britain is outside that Union", he told the BBC.

"I'll be meeting with the governor of the Bank of England and others today to access where we are with the United Kingdom economy", he added.

Defacto leader of the Leave campaign Boris Johnson in turn replaces Hammond as Foreign Secretary.

"Borrowing, when the cost of money is cheap, has some great attractions, but this country is already highly indebted", Hammond later told ITN, adding that the government needed to be careful about what signals it sends to the markets.

Theresa May became the new prime minister of the United Kingdom yesterday and has already made waves with her cabinet reshuffle - announcing Boris Johnson as foreign secretary and, more importantly, Philip Hammond as chancellor of the exchequer. His first role in the Coalition was as transport secretary, followed by defence secretary in October 2011 and most recently head of the Foreign Office, a post he took in July 2014.

"What we did in 2010 was exactly the right approach for the challenges that faced the British economy then", Hammond said on Thursday.

"I'm hopeful that a number of other European countries will want to have discussions rather than negotiations in the next 18 months, and I think that's highly likely".

Five years on he has been welcomed back into the ranks by the new prime minister.

CMC analyst Jasper Lawler said Hammond was a "fiscal hawk" who would be seen positively by investors who would have been concerned by May's plans to reduce austerity and tackle corporate governance rules.

Asked about the former London mayor's new role, which means he is in charge of MI6, Mr Hammond told Today: "The Cabinet works collectively and we have got a range of different characters and a range of different styles and a range of different talents". "The lead and the tone will be set by the prime minister".

"Hammond will also have to take some extreme measures with respect to belt tightening and many of these affairs will not be applauded by public".

The comments come ahead of a decision by the central bank's Monetary Policy Committee on whether to stimulate the economy.

The biggest surprise was the resurrection of Boris Johnson, who was given Mr Hammond's old role as foreign secretary.

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