New government sees George Osborne replaced as chancellor

The Houses of Parliament

Prime Minister Theresa May has announced the appointment of a new chancellor of the exchequer.

Following her succession to the role of prime minster on Wednesday 13 July, Mrs May began forming her new government. She has already named six cabinet members, including Chancellor Philip Hammond, who replaces George Osborne.

Mr Hammond had served as foreign secretary between 2014 and 2016.

The chancellor is already setting himself apart from his predecessor

Mr Hammond’s first move as chancellor was to rule out an emergency budget. This sets him apart from his predecessor, who had warned prior to the EU referendum that there would need to be a crisis budget if the UK voted to leave the EU.

Known as a cautious politician who rarely makes headlines, Mr Hammond said:

“The prime minister made clear we will do an autumn statement in the usual way—in the autumn—and we will look carefully over the summer at the situation.

“I’m seeing the governor of the Bank of England this morning and we will take stock.”

The Bank of England’s Monetary Policy (MPC) Committee met today. Despite the expectation that they would cut interest rates, the MPC voted 8–1 to hold the Official Bank Rate at 0.5%. The minutes from the meeting suggest that the Bank will wait until next month to take action.

A new economic direction for the UK?

Mr Hammond served in the shadow Treasury when the Conservative Party was in opposition. During this time, he helped to shape the Conservatives’ austere public spending policy.

Mr Hammond said that the government still aimed to reduce the deficit, but that it would scale back austerity in order to deal with the economic turbulence caused by Brexit.

Landlords call for a reversal of buy-to-let tax measures

Mr Hammond is also one of the wealthiest members of the new cabinet. His estimated £8 million fortune includes a rental property, which he gifted to his wife in 2012, reputedly to avoid paying extra income tax on his rent.

The Residential Landlords Association (RLA) has called on Mr Hammond to reverse buy-to-let tax rises. Measures introduced by his predecessor, George Osborne, include higher rates of stamp duty and the removal of tax relief on buy-to-let mortgage interest.

It is possible that the new chancellor may accede to these calls. But as a landlord, he may wish to avoid passing measures that benefit himself. And with the large task ahead of him, it may be that Mr Hammond’s attention is elsewhere in the coming months.

The UK is on course towards Brexit

The new government includes two new positions: the Secretary of State for International Trade and the Secretary of State for Exiting the EU.

The positions, held by Eurosceptics Liam Fox and David Davis, demonstrate the prime minister’s commitment to leaving the EU. But she also stated that the UK needs “time to prepare” for the negotiations.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.

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