Boris Johnson and Jeremy Hunt have been warned by the Chancellor that there will be no extra cash to meet their spending pledges in the event of a no-deal Brexit.
Philip Hammond told the Tory leadership contenders that the “fiscal firepower” that has been stocked up will be needed entirely to counteract the effects of departing without a deal.
The “fiscal firepower” we have built up in case of a No-Deal Brexit will only be available for extra spending if we leave with an orderly transition. If not, it will all be needed to plug the hole a No Deal Brexit will make in the public finances.
— Philip Hammond (@PhilipHammondUK) July 1, 2019
Both candidates have made costly pledges as they vie to replace Theresa May as prime minister.
Writing on Twitter on Monday, Mr Hammond said: “The ‘fiscal firepower’ we have built up in case of a no-deal Brexit will only be available for extra spending if we leave with an orderly transition.
“If not, it will all be needed to plug the hole a no-deal Brexit will make in the public finances.”
Foreign Secretary Mr Hunt and frontrunner Mr Johnson both say they are prepared to take the UK out of the EU without a deal.
Mr Johnson has taken a more hardline approach, saying the exit must happen by the Halloween deadline “do or die”, but Mr Hunt said he would ask for a delay if a deal was in sight.
Mr Hammond’s warning comes after Mr Hunt prepared to announce a £6 billion war chest to handle a no-deal Brexit.
Mr Hunt has also pledged cuts to corporation tax at an estimated cost of £13 billion per year in the short term and an increase in defence spending to cost an additional £15 billion in four years.
Mr Johnson has signalled he would be prepared to increase borrowing to fund infrastructure projects.
He has also pledged to give a tax cut to earners on more than £50,000, a move which was criticised as benefiting the top 10% of earners and costing a suggested £9 billion.
