Mike Rake: 'We have moved from one of the fastest growing economies in the EU and OECD to one of the slowest ... The cause: Brexit'
Mike Rake: 'We have moved from one of the fastest growing economies in the EU and OECD to one of the slowest ... The cause: Brexit' © Bloomberg

Top City of London figures have slammed the government’s handling of Britain’s exit from the EU, blaming Brexit for the sharp downturn in the UK’s economic performance evidenced in chancellor Philip Hammond’s Budget.

Mike Rake, until this month chairman of BT, said last week’s Budget and fresh data from the UK fiscal watchdog offered stark evidence that “we have moved from one of the fastest growing economies in the EU and OECD to one of the slowest with the inevitable fiscal and income consequences. The cause: Brexit”.

Mervyn Davies, the financier and former minister, said Brexit was forcing the government to adopt emergency measures to deal with short-term economic fallout. “Confidence in Britain is falling,” Lord Davies added. “It feels as if we are having a nervous breakdown as a country, with only the far left and far right having a voice.”

The comments were made as part of an FT City Network debate, which gave a generally cautious welcome to Mr Hammond’s Budget and his initiatives to tackle the country’s housing shortage and productivity woes.

Philip Hampton, chair of pharmaceutical group GSK, described it as a “reasonable political success, as well as being economically sensible”.

Elizabeth Corley, vice-chair of Allianz Global Investors, applauded education initiatives to encourage science, technology, engineering and mathematics.

However, several business leaders warned that without more radical action to boost the economy Britain could be heading for a bumpy Brexit.

Barbara Judge, chair of the Institute of Directors, said: “With the next Budget [in November 2018] too close to the EU exit door, this was the last opportunity to have a real impact on shaky business confidence.”

Rhydian Lewis, chief executive of fintech lender RateSetter, said: “The economy is crying out for the government to be brave.”

The Office for Budget Responsibility, the UK’s independent fiscal watchdog, published its own downgraded economic growth forecast alongside Mr Hammond’s Budget.

This year’s growth would be just 1.5 per cent, the OBR said, compared with the 2 per cent it predicted in March. The rate would decline further — to 1.3 per cent by 2019 — it added.

Mr Hammond’s initiatives on housing were the most widely praised part of the Budget in the FT City Network debate.

But even in this area the government’s approach should have been more radical, several participants said. “There is a material risk that none of his proposals are going to go deep enough to make a difference,” said Mr Lewis.

Nonetheless, given the fragile position of the government, Paul Drechsler, chair of the CBI employers’ organisation, was heartened. “Possibly the most significant outcome is that in the 24 hours [following Mr Hammond’s] Budget he has not been undermined and criticised by his own party or cabinet team colleagues,” he said.

The FT City Network is a panel of more than 50 top financiers, business leaders and policymakers, which debates a different topic online each month.

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