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Financial Services


19 December 2016

The Boring Budget: Why the Chancellor’s rhetoric should reassure financial services companies

Written by: Imogen Gardam, Account Manager at Smithfield

Financial, Government Affairs

“Make America Great Again.” “Take Back Control.” “Long Term Economic Plan.” Slogans may win elections, but do less to buoy a nation’s confidence once the polls have closed. This year has seen a vote for Brexit, a new Tory administration and the election of Donald Trump; the next few months offer the prospect of further political unrest across Europe, not to mention the increasingly rancorous divorce negotiations between the UK and Brussels.

Philip Hammond’s forlorn revelation of the £123 billion borrowing black hole in the British Government’s finances encapsulates the economic instability ahead. In such situations, finance ministers may be forgiven for reaching for words when the numbers look so unpromising. Hammond’s one liner – making Britain “match fit” for Brexit – was a brave attempt to divert attention from the data.

In general, however, the tone of the Autumn Statement – Hammond’s first major speech since his appointment by Theresa May – made clear that catchy soundbites are no longer enough, and have perhaps in themselves compounded the geopolitical turbulence.

In fact, the almost deliberately dull anti-rhetoric of the Autumn Statement could be an understated move to reclaim a “new normal” in politics, whereby the reality of economic data – so decried in the referendum campaign – and considered explanation are more appropriate than rhetorical flourishes, tweets and slogans.

Financial services firms should welcome this shift in language. The overarching message of the Autumn Statement was that finance is complicated, details are important and economic problems cannot be properly understood when reduced to 140 characters.

In delivering a budget which values careful evidence-based explanation, Hammond has given the cue to companies large and small (which underpin our economy) to speak in similar terms. Spreadsheet Phil, like any CFO, knows that talking up financial statements takes you only so far. This is surely a language in which companies are more comfortable.

The Autumn Statement might therefore be seen, if not as a U-turn, then at least as part of the government’s rapid repositioning since the Prime Minister’s criticisms of Britain’s open business culture at her Conference Speech in September. May had already rehearsed some of her Chancellor’s announcements through her own speech to the Confederation of British Industry earlier in the week, where she stressed that the Autumn Statement would be “ambitious for business and ambitious for Britain.”

In the same way, Hammond’s detailed fiscal analysis was delivered with the corporate world at front of mind. Companies, especially financial services, have been calling for reassurance that this government believes in business and recognises the need to maintain an open Britain, which is attractive for investment, especially as confidence will be even more delicate once Article 50 is triggered.

In answer, Hammond delivered a predictable, deliberately unexciting analysis of public spending. The speech was short at only 50 minutes with no big reveals. This sober rhetoric suggests the Chancellor’s instinct is to cultivate new “shock-proof” language of politics suitable for an economy that must cope with and indeed try to grow through uncertain times.

Although many have termed it “the boring budget,” Hammond’s Autumn Statement also reveals how he wishes to distinguish himself from his predecessor. George Osborne epitomised slogan-driven politics. As Chancellor, the nation grew accustomed to his bi-annual budgetary performances; new projects were announced every six months as Cameron’s right-hand man paraded his conviction that tighter purse strings were leading to economic growth.

The new Chancellor’s vernacular could not be more different. Gone are Osborne’s tweetable gobbets of “our long term economic plan” and “fix the roof while the sun is shining.” If there was any soundbite in Hammond’s speech, it was that of “an economy which works for everyone,” which was mentioned six times throughout. The tone of this speech was designed to distance May and Hammond’s stolid Conservatism from the laissez-faire cosmopolitanism of the previous government.

It is the Chancellor’s job to break the economic bad news to the country. Hammond’s admission that he would prove “no more adept at pulling rabbits from hats” than his predecessor was frank acknowledgement of the financial difficulties which now face the government; difficulties that must be reconciled with a post-Brexit populist agenda and managed without alienating the business ‘elites’ who must generate the wealth to pay for it.

This is the public framework of which the private sector is inextricably a part. It’s a rickety framework and there are many unanswered questions. It is worth noting that Hammond, once thought of as the City’s best advocate for maintaining a relationship with Europe, made no attempt to address issues of single-market access in his speech.

But perhaps Hammond’s new language can still pay dividends. In a digital era of twitter soundbites, it is easy to make quick wins and exploit “post-truth” culture. But a solid, unflashy message that champions transparency will eventually build bridges between its listeners. Adapting, or perhaps reverting, to a more traditional lexis may be one way to re-build trust between government, businesses and the consumer, and to deliver the productivity and growth Hammond admits we lack.

A generation ago, Mrs. Thatcher’s Chancellor, Sir Geoffrey Howe, took the same undemonstrative approach. His opponent, Denis Healey, compared Howe’s performance to “being savaged by a dead sheep”; everyone remembers the joke but it was Howe, not Healey, who won. Philip Hammond has learned speaking simply doesn’t necessarily mean speaking noisily. He may be speaking to us for a long time yet.

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