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Tue, 2 June 2020

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Boris Johnson 'will ditch Philip Hammond's deficit target' to fund spending spree as Prime Minister

Boris Johnson 'will ditch Philip Hammond's deficit target' to fund spending spree as Prime Minister
3 min read

Boris Johnson will rip up Philip Hammond's deficit reduction pledges to fund a series of tax breaks and spending commitments if he becomes Prime Minister, it has been claimed.

The Daily Telegraph reports that the Conservative leadership frontrunner will pursue a policy of "fiscal loosening", reversing curbs on public spending imposed by the current Chancellor.

Allies of the former Foreign Secretary told the paper that he could pause or reverse Mr Hammond's longstanding push to reduce the deficit to zero in order to fund a raft of commitments.

One former minister backing Mr Johnson said: "In order to honour Boris's spending pledges the next Bis going to have to put a temporary freeze on deficit reduction. 

"Of course it is important to continue fixing the roof but there is going to have to be some flexibility there to give the economy the post-Brexit boost that it needs."

Mr Hammond wrote to every candidate in the Conservative leadership race urging them to stick to his current pledge to limit the deficit - the gap between what the Government spends and what it takes in tax - to 2% of GDP "at least through 2021-2".

The Chancellor - who has already vowed to resign if Mr Johnson becomes Prime Minister - has meanwhile warned that leaving the EU without a deal would remove any "fiscal headroom" available for spending pledges and tax cuts.

But a senior Tory source told the Telegraph: "Boris's upbeat rhetoric, signalling a break in the miserable, dour and downcast tone of the May government will be reflected in the Budget. We've all had enough of Fiscal Phil."

One of Mr Johnson's advisers told the paper that he was aiming for "a fiscal loosening of less than 1 per cent of total public spending" - a plan they said would "do a lot to get things moving for the middle classes".

But former Conservative leader Lord Hague - who was in the Cabinet when David Cameron kicked off the decade-long drive to cut public spending - warned Mr Johnson against turning on the spending taps as Prime Minister.

"Fiscal conservatism means not rushing to spend money in the first few weeks, but using a spending review to keep a lid on hopes and a grip on ministers," the party grandee wrote in The Telegraph.

Mr Johnson has already made a string of spending and tax pledges before seizing the reigns as Tory leader.

He has promised to reverse cuts to policing with a £1.1bn cash boost to hire 20,000 more officers as well as pump £4.6bn into the budget for English schools.

Mr Johnson has also pledged to lift the higher rate income tax threshold from £50,000 to £80,000 - in a move the independent Institute for Fiscal Studies has estimated will cost around £9bn.

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