Westminster in crisis and a raise in rates

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Welcome to "FT Politics," the Financial Times' podcast on all things British politics. I'm Sebastian Payne and in this week's episode we'll be discussing the unravelling sexual harassment scandal at Westminster and the Bank of England's decision to raise interest rates ahead of the budget. I'm delighted to be joined by our Political Editor, George Parker; Public Policy Correspondent, Helen Warrel; Chief Economics Commentator, Martin Wolf; and Portfolio Manager at BlackRock, Rupert Harrison. Thank you all for joining.

It has been another tumultuous week in British politics since the last one. Throughout this week a rolling series of allegations have been made about the past, recent, and further conduct of MPs and ministers, resulting in the shock resignation of Defence Secretary, Sir Michael Fallon; the even more shocking elevation of Gavin Williamson from the Whip's Office to the Ministry of Defence. Questions are hanging in the air about what is coming next, will there will be further departures from the Cabinet, and once again whether Theresa May can survive this crisis.

George Parker, Westminster has a slightly end-of-days feel to it at the moment. I argued this week that this could have a similar impact to the public's perception on politics as the MP's expenses scandal. As someone who was there then and there now, what's the general atmosphere like?

It's fearful. It's sour. It's very defensive. And you're right. The MPs do feel comparisons between this and the expenses scandal. Some of them think this could be a more damaging scandal for MPs in the sense that it's human beings involved rather than just cash. So yes, it's a fearful atmosphere. It's cutting across all party lines, of course. But I think from a political point of view it's especially dangerous for Theresa May given the fact that Conservatives are the governing party and frankly they've got enough problems on their plate trying to deal with Brexit with no majority and no money. And now this comes along. it's a huge blow to the May government, as well as to the body politic of British politics.

It's quite amazing, because this all started with the Harvey Weinstein scandal. I think nobody could have predicted this would have gone from Hollywood all the way to Westminster. And this stuff has obviously been bubbling away for years. A lot of these allegations pop up every so often. But the sheer torrent of things, including this infamous dossier of 36 MPs, which is slightly toxic in a way. Because there's a lot of stuff on that dossier that isn't actually misconduct, consenting adults an having a relationship. So some people said, oh, well actually this is a bit of a witch hunt. But there's been some really serious allegations in it, including two of rape this week.

Yeah, that's right. Well, you meet some MPs who privately will say, we can't say this publicly. But there are elements of a witch hunt to this. But I think generally the view is that this has been going on for too long and it had to be exposed. And as you say, the rumours like this have been swirling around for a long time. But the difference this time is it has reached a critical mass and the Harvey Weinstein affair brought the whole thing into focus. It went from Hollywood into the BBC, and then very quickly into Westminster. And now it's in Westminster. I can't see it stopping for possibly a number of weeks. And that's hugely dangerous for our political classes and very damaging, I think, for Westminster generally.

Well I have to say, I think, it's actually quite amazing in some ways that this stuff hasn't come out before. I think it's very difficult if you haven't worked in Westminster or you don't know the culture of Westminster to really underestimate the extent to which it's an extremely strange working environment. You've got lots of MPs who live away from their families. Their families may be in their constituencies. So they are essentially living in London alone during the week. There's lots of out-of-hours carousing, drinking, socialising. A lot of the information exchanged both between MPs and between MPs and journalists is done over long lunches, long dinners, drinks in Strangers bar. And I think this is actually combined to create an environment in which harassment and more serious abuse can proliferate.

Because the Palace of Westminster has about 14,000 people who work there, Helen. It's a very unique work environment, apart from the fact is a very old building, very small, very cramped; it feels so hermetically sealed from the rest of society. And a lot of new MPs you've seen particularly of the Labour intakes sort of come in to us and say, what is this place? It's so traditional. And the whole thing is really based on power structures, particularly if your staff-- and most MPs have two or three staffers who work in Westminster-- it's all about who your MP is, how big their office is, who they know, where you're situated. And it creates this very odd dynamic.

Now obviously you get power dynamics in any workplace, whether it's the city of London, or the media, or entertainment industry. But it feels particularly potent in Westminster, because it's a system that is based on patronage.

Absolutely. I think there are many, many ways in which this system is a complete anachronism. And I think there are lots of things about it that would shock people who don't work there. MPs directly recruit and hire their own staff. And as a staff member working as a researcher for an MP, you're very much beholden to them for your career advancement, for your progression through politics. There are lots of very ambitious people going straight from university at a young age, maybe without experience of being elsewhere in the workplace, going straight into Parliament, and being in the situation where actually there are relatively few protections of their rights. And they may not know who they can speak out to if things start to go wrong.

It's quite complicated, George, because essentially it's 650 small businesses operating in this Victorian era palace. And if you say to MPs, maybe there should be a central HR system. And they say well, hang on a minute. We're not responsible to the parliamentary authorities. We're responsible to the people of the electorate. And you get this constant clash about where those lines are. And Parliament under speaker, John Bercow has done a lot to try and strengthen the systems for reporting such things.

But even still the fact that this has essentially been done through the media shows that there's a real failing in how Parliament is operating to allow people to raise these allegations and see them sort-- this case of Bex Bailey who is a well-known Labour activist who spoke out this week about a very serious sexual harassment allegation that wasn't reported, because she was told it would damage her career within the party. That again says as much about the culture as about the structures.

Yeah, I think that's true. Lots of MPs are resistant to the idea of having an independent authority overseeing hiring and staff contracts, basically, of workers at Westminster. They think it became too bureaucratic after the expenses scandal, when so-called IPSA was set up. So they do resist that. But I think the structures that Helen has just been describing are antiquated. I think John Bercow rightly is saying it's not just for the parliamentary authorities. This is down to the political parties themselves to sort things out. And we've had the episode this week of Kelvin Hopkins, a Labour MP, who's been suspended now after allegations were made against him, but only after Jeremy Corbyn had promoted him to the Labour front bench.

And there's a lot of naming and people who are accusing each other of various things in the Labour Party as a result of that case. But it runs right across party lines of people being reported and frankly nothing much happening.

I also think this element of people high up in the party having known about these allegations is something that is actually quite shocking. But it really does seem to be a theme here. There are a lot of people against whom there seem to be fairly-- there's a general awareness that their behaviour in the past has not necessarily been entirely above board. And when you start asking MPs about it, when you start talking to party activists about it, it's no secret. A lot of these things have been well known for quite a long time.

Let's pick up on one of the more practical things that happened as the result of these allegations, George, which was the resignation of Sir Michael Fallon as Defence Secretary. This began with a story on the front page of The Sun about him putting his hand on a journalist's knee, and then also some comments that he apparently made to Andrea Leadsom, leader of the House of Commons. Was it a surprise to you that Sir Michael resigned? It seemed to come a bit somewhat out of the blue.

I think the timing of it was quite surprising. I don't think anyone to expected him to resign quite that quickly. But nevertheless once the allegation had been printed on the front page of The Sun about him putting his hand on the knee of Julia Hartley-Brewer, the journalist. People started asking questions about whether this was a one-off event. It happened 15 years ago. And Westminster, being what it is, there were rumours swirling around of other episodes. And Michael Fallon's own team were asking people if they knew of any other incidents. They were trying to get to the bottom of this to see what more was going to come out.

But of course, we now know that things were brought to a head by the fact that Andrea Leadsom, the leader of the House of Commons, went to see the Prime Minister's Chief of Staff with a series of specific allegations against Michael Fallon. Now Michael Fallon denies saying some of the things Andrea Leadsom said that he said to her. But nevertheless, I think that was the final straw as far as Theresa May is concerned.

Because the last thing you want in these kinds of episodes, if there seems to be a drip feed and for you to lose control of the story. That's exactly what happened to John Major back in the 1990s. He was being knocked around by events. So I think in the end, Theresa May said to Michael Fallon, look, you're either going to have to go voluntary or you're going to be fired.

But it sort of feels like that's what's happening anyway, Helen. Because Michael Fallon has gone, and that's sort of almost drawn a line under that. But there's still many questions hanging over other people, including Damian Green, the Deputy Prime Minister, who's had some allegations put to him. And he's being investigated by Sir Jeremy Heywood, the Cabinet Secretary, at the moment. And nobody seems to think that this is the end of this. And I think all eyes will be on the Sunday newspapers to see what other allegations there are. And it does have that feel as if it's going to be a continual drip about ministers, and cabinet ministers, and MPs, and things they've done in the past.

I think that's true. And this definitely has the feeling of something that is endemic. I mean you mentioned the hit list of 36 Tory MPs. And while that's extremely controversial, some of the allegations on there are extremely shocking. And I think this is not something that is going to sort of quickly go away. I mean one thing that's just worth saying about the Prime Minister, when she was in the home office, she also held the Women and Equality's brief.

Theresa May herself is someone who has very much eschewed late-night drinking. She's not a particularly clubbable person. She doesn't frequent the bars of Westminster. And I think you could see very much on her face during Andrea Leadsom's statement earlier this week that she is completely and utterly appalled by this. And I can imagine that it's something she really, really wants to stamp on before it gets out of control. The question is whether or not, now that we've opened the floodgates, we can stem the tide of allegations that are going to come out.

And then of course following Sir Michael Fallon's resignation, George, we then had a mini reshuffle. And we had a very surprising choice for Defence actually in the form of Gavin Williamson, who was the Chief Whip, and has been pretty successful in the sense that he didn't lose a single vote during this very hung Parliament, made quite a lot of enemies in the Conservative Parliamentary party, who did not shy away from speaking to the media this week and putting out their views about Mr. Williamson. And the basic allegation is this is a guy who has never spoken at the despatch box, has never been a minister, does not have any experience of running a big department, and is now in charge of the military at a time of which there's big questions about equipment, personnel, funding, Britain's role in the world, NATO, North Korea. And this is now all on his plate with someone who has no military experience whatsoever in his past. So I think that was certainly a shock when that came.

And there was are pretty good quote as well that you reported on, from ministers that sort of summarised how the Parliamentary Conservative Party is feeling.

Yeah, one minister said to me that this appointment was rather like Caligula appointing his horse as a consul as one of his last acts as emperor. And there were a number of people who said this would be Theresa May's last mistake. I don't remember there being a more angry backlash to any specific ministerial appointment in a reshuffle. People were coming out of the House of Commons tea rooms with their ears steaming. I think some people thought that Theresa May missed a good opportunity to put a woman into the Ministry of Defense.

Penny Mordaunt was a named being talked about.

For example, we've never had a female Defence Secretary. I think that's one thing. But also there was a sense that here was obviously Gavin Williamson was the judge and executioner of Michael Fallon that he would have advised the Prime Minister on whether Michael Fallon could stay. Michael Fallon went, and then lo and behold, the best person for the job was Gavin Williamson.

Chief Whips are always held in some suspicion. I mean Gavin Williamson is someone who has sinuously moved from being parliamentary private secretary to David Cameron, then quickly moved to being Theresa May's campaign manager. One of the very few people who managed to survive the political carnage around the Theresa May first term Chiefs of Staff, Nick Timothy and Fiona Hill. He stayed in with them. So he's someone who's very adaptable staying very close to power, and also someone who's extremely ambitious. As he's now been installed as sixth place in the bookies racings to be the next Prime Minister. And I should think he probably sees himself higher in the racings than that.

Well, this really is something out of the Francis Urquhart's school of promotion, isn't it? I mean for those fans of the first and original House of Cards, the idea of the Chief Whip who has dirt on everyone, working his way up and finally potentially taking on the leadership of the party, is something that some people have compared to the current situation with Gavin Williamson.

And the thing that's most bizarre, this whole harassment scandal is about the whip's office, about what did they know. Did they know about the conduct? And the guy who's in charge of that has only just been promoted and rewarded. So I think that's where a lot of the anger came from. But I think going back to this leadership question, George, you know before Theresa May's disastrous Tory conference speech thing, everyone forgot this little talent show that Gavin Williamson ran for the hall, where Chief Whips don't normally give big speeches to party conferences. But Gavin Williamson was up before them and brought out all these new fresh-faced 2017 intake Tory MPs, who were a diverse bunch. They're not your kind of moulded and career politicians. They come from different parts of the country, different professions. And the imagery of that was quite clear.

It was here I am. Here's my next generation and these people I'm putting forward to you. So clearly, Mr. Williams does want to be Prime Minister and sees himself as the leader of this new generation. But do you think he's done his reputation so much damage over this situation that the party would never ever accept him? I have no idea what real support base he's got.

Well he's, as you say, he does hold a lot of knowledge, which is always useful. He has the whip's broken. He has an ally now as the Chief Whip. So he has power and he has patronage. Has he damaged himself by allowing himself to be promoted in the position? Possibly yes. But nevertheless what the political landscape will look like in a couple of years' time when I predict Theresa May will no longer be Prime Minister, it's very hard to tell. But you're right. He's put himself almost at the vanguard of the top 2015-2017 intake as someone who can represent their interest, so maybe a generational break. But it's a long shot. As you say, we've never actually heard him speak from the despatch box in the House of Commons. So whether he can be the next Prime Minister is quite a bit question, isn't it?

Helen, out of all this, where does Theresa May come out? Because at the beginning she said she would take a zero tolerance approach to any of these allegations and sort of kick anybody out of the Tory Party who had been alleged. But if you take the instance of Stephen Crabb, a former leadership contender who's been alleged to be sending texts of inappropriate nature to younger people, yet he's still in the Conservative Party. So it doesn't feel as if she's really on top of this scandal. And as George was saying, it is going to be a drip, drip, drip. And it could just end up consuming her government at a time when she's got the budget approaching, Brexit negotiations, the economy stalling, inflation is rising. It's a very febrile time at the moment for a Prime Minister who's in a very difficult spot, who seems to have somewhat still tuned out.

I think the absolutely key thing for Theresa May at the moment is to really engage with the other parties and make this into a cross-parliamentary attempt to crack down on this. I mean clearly the priority needs to be a sort of confidential reporting system so that people can raise allegations and concerns in a way that they are not themselves going to be outed or made public. And I think the sooner that she can actually advance some kind of cross-party discussion on this and show that they're making progress and show that some concrete steps are being taken, the better.

Yes, I totally agree. I think she needs to get on top this very quickly. I think it's a big test for her. It's actually an area where, as Helen was alluding to earlier, she does actually have a track record defending women's rights and of promoting women in Parliament. It's a good opportunity for her to get ahead of the game. The fact that she looked like she was being pushed into action this week by Andrea Leadsom, as we were discussing earlier, didn't bode very well. But I think it's a big test for Theresa May. Because this is going to be something, which as with John Major and sleaze, will be a real test of leadership and pose a real danger to her government.

And for Jeremy Corbyn too, because as you said, these allegations are across party. And the list of allegations against Labour is growing. And it's obviously received less attention, because it's not the governing party. They're not running the country. But there's real questions over that party's procedures for dealing with these things too.

Yeah, that's true. And yeah, just because the Labour MPs in question are less likely to be household names and they're not running the country, as you say, doesn't disguise the fact there is a problem. It's a problem which frankly, people have talked about for a while. Is there are elements of misogyny in the Labour party, particularly on the left of the Labour party? Do people turn a blind eye to things? That certainly seems to be the case with Kelvin Hopkins who was promoted after specific allegations were made against him. So yes, I think there's lots of blame sharing going on in the Labour party. Because they realise this is a dangerous moment for Jeremy Corbyn too.

And as Ruth Davidson said this week, there's going to be some very big shovelers needed to clear out this rather ageing shed.

The big economic news from the UK this week was the Bank of England's decision to raise interest rates for the first time in a decade, and crucially the first time since the big financial crash. The slight increase to 0.5% has gone down surprisingly badly with markets and the city of London, perhaps because of the weak state of the UK economy and some of the Brexit uncertainties ahead.

Martin Wolf, do you think Mark Carney made the right decision to raise interest rates? Obviously with inflation soaring and UK's employment ever increasing there is an argument that it was time to cool things down a bit.

Yes, I should address that at least notionally it wasn't Mark Carney's decision.

It was the MPC.

Though, I have to say the distinction in the case of this governor is rather difficult to draw. He's no Mervyn King who will be happy to be outvoted. But anyway, I think it's very difficult to get excited about this either way. There's a perfectly reasonable case that we need to tighten monetary policy a bit. It is important to remember we got to a quarter point immediately after the shock of the Brexit vote. We were at half a percentage point for the whole previous period after the crisis. We're back there.

By any normal standards, monetary policy is enormously loose. And even if they will, as Ben Broadbent seems to indicate, tighten a couple of quarter points further, it would still remain highly supportive. I don't feel strongly in all truth either way. It's unlikely it seems to me to turn out to be a huge mistake. But we really don't know. The economy's very difficult to read now.

Rupert Harrison, what did you make of the decision? Because as I said, it got a relatively bad reception, and the Bank of England has had to go out there again on Friday to explain why it did this. And I think obviously savers are very angsty about increasing interest rates, particularly given where there are huge levels of consumer debt at the moment.

Well from a market point of view, it was a classic example of the old adage, buy the rumour, sell the fact. And so the big story was back in September the Bank of England really shocked everyone by revealing that they were getting close to raising interest rates. And I think everyone had the assumption that Mark Carney was pretty dovish, he was concerned about Brexit, and an interest rate was a long way off. And then we saw a big change. They really talked that up in September. So relative to the expectation, when the news came, the language around it was quite dovish in the sense that it didn't give the impression that the banks were sort of raring to get a second hike anytime soon. And I think they had sent Ben Broadbent out on the Today programme to try and really convince people that they really were determined to raise interest rates, and you better watch out.

I think markets are still a little bit sceptical. And I think it all comes down to this question of what is the impact of Brexit. I think it's pretty clear that Brexit is having an impact on the economy. But the judgement that Mark Carney and the Bank of England have made is that it's having an impact not just on what people are spending, and therefore the demands of the economy. But it's having an impact on the potential growth rate of the economy, particularly if businesses and particularly international businesses are going to invest less in the UK. Then the rate at which the UK economy can grow before it starts generating inflation might be significantly lower than it was. And of course, this comes after a long period of very weak productivity growth.

So it was quite a pessimistic picture from the Bank of England that despite sluggish growth, they had to raise rates. I think that this rate hike is probably justified. I personally would be biding my time before the next one.

It's perhaps worth noting that in addition to the very important point Rupert's made, net immigration is slowing. I mean it's not dramatic. But that's been an important source of increase of the labour force. And that's another reason why the bank is justified, I think, in believing pretty obviously-- fewer Europeans are coming-- that the supply potential of the UK economy will grow more slowly than it would otherwise have done. And after all, that was the point of Brexit, wasn't it?

Well as we said in an FT editorial this week, Martin, essentially what Mark Carney did was take out a slight insurance policy when rates were slashed ever so slightly after the Brexit vote last summer. He's essentially cashing that in now. Because all the signs, we've had the low growth is continuing and the economy is sort of bumping along. There are some factors that show things are really beginning to weaken there, which obviously has a big knock-on effect for the public finances too.

The public finances seem to have done rather better than people expected. And since the Chancellor spoke in March, things have gone a bit better than expected in terms of outcomes. But it is true. The Institute for Fiscal Studies made it clear in its analysis that we certainly can't be confident that that will continue. And my guess would be that Philip Hammond will be inclined to take a very cautious and conservative view, certainly not overthrow the rules he's just introduced. He'll find some money to give away. But I would be very surprised if we're going to have a very exciting give-away budget as long as he's Chancellor.

Well Rupert, it's obviously that time of year with the leaves changing colour, it's colder in the wind. And that normally means autumn statement. Now this is a budget. Because the autumn statement, as we used to call it, has been abolished. And it's a pretty tricky set of circumstances for Mr. Hammond. Because he's got this public appetite to have some kind of goodies, some kind of relief. But at the same time, he's not wanting to go and massively reduce his fiscal targets. He's going to continue to focus on cutting down the deficit. And in political terms the last three budgets have all blown up and taken a big political impact on the chancellors and their prime ministers. So it's a difficult tightrope he's got to walk there.

Indeed, maybe just worth saying, I think two points before we get onto the politics. There are two very important fundamental linkages between the Bank of England decision and the budget. The first is this poor productivity performance, which is really the reason that the Bank of England is raising interest rates, despite pretty sluggish growth. It's that very, very same poor productivity growth that is likely to lead the Office of Budget Responsibility to judge that productivity is not going to pick up like they thought. And despite, as Martin said, short term improvement in the public finances, in those later years of his forecast he's probably going to get a pretty significant downgrade. And that will probably be the main story on the day.

I think the second link from the interest rate rise is that I think that Philip Hammond-- the challenges to continue to bring down the deficit are now entirely political. Really at the point where the Bank of England is starting to raise interest rates and tighten monetary policy, there isn't really an economic argument for loosening up on fiscal policy. Because the economy is really at full employment. It's generating inflation. The Bank of England is concerned about that.

And so I think from an economic point of view, you should continue to try and deal with this deficit. Because it's still a problem. The politics are the problem, the politics of fatigue in the population, politics of a very small majority in the House of Commons. And as you say, the politics are the fact that every big event that the government has done recently has unravelled. And I think that this is-- if I was advising Philip Hammond now, I would say, play it safe. You just need to get through the budget unscarred and without a massive U-turn. And that would be relative to recent history of success.

I think one point that is certainly in his mind, it's a nightmare job at the moment, pretty obviously from many dimensions. But I think he, probably because of who he is and because of where we are the Brexit negotiations-- which is nowhere as it were, we haven't got anywhere-- he is clearly very keen to preserve confidence in the British economy, preserve confidence of investors, preserve confidence of people who will invest, people who are here who are thinking about leaving. So I think he would consider it. And I think he would be right. Cardinal mistake to give the impression to the world that right now when everything so difficult, we're going to throw away discipline and caution. That would be, in his view and I would share that view and I think Rupert would too, a huge error.

On the other hand, it's clear all the political pressure is on the other side. Is he strong enough to resist? I really don't know. You're probably better judge of that than I am.

I think the chancellor is certainly very frustrated that members of the cabinet have been freelancing on the government's economic policies over the summer, talking about the public sector pay cap, talking about housing investment. These are obviously political challenges for the government. And at some point they will have to tackle them. But given where we are, as you said, with Brexit and the state of the economy, I think he's ought-- wish people would just leave the economics to him.

And I think that lack of discipline really started with the election, anyway. We had an election campaign where Theresa May and her team were determined to talk about anything other than the economy. They didn't want to go in on the record of dealing with the public finances. And that has really, I think, set the tone now. That from there to talking about loosening the public sector pay cap. The cabinet ministers going on, talking about borrowing 50 billion pounds, here or there. I think that he does need to do something to acknowledge those concerns, while also reestablishing his authority.

That seems absolutely true. Do you think the Chancellor should be worried about inflation at all, Martin? Because it's obviously been creeping up over the past year, still at pretty low levels in terms of in historic terms, but it's source of concern.

Rupert didn't mention it. But I presume that one of its effects is that it's going to raise public spending, more or less automatically. Because there are things--

Yeah, there's bad inflation and good inflation when it comes to the public finances. Bad inflation is imported from abroad or from oil prices. And good inflation is if the wages are growing rapidly. Because of course then the money floods--

This is obviously bad inflation then.

We've mainly got bad inflation.

This is mainly bad. I mean this is largely a reflection of the past exchange rate collapse. Now the optimistic view is that we've had the exchange rate collapse. It's now quite a long time ago. It's passing through. It won't be transmitted to wages. So it will be a temporary blip upwards. And that's very good in terms of monetary policy, but it also means the effect on public spending will be limited. Obviously we haven't discussed it, the real nightmare for everybody is that it does get transmitted to wages. We start getting a bit of a wage price spiral in a world with no productivity growth. That's a real nightmare. And then the Bank of England has to tighten much more, and fiscal policy becomes a real problem.

And this is ultimately probably the biggest challenge after Brexit facing the UK economy, Rupert. Everyone talks about unlocking the productivity puzzle, trying to get wages growing quicker. But there's probably no quick fix solution that Philip Hammond can sit up and do one thing. It's a whole series of things, a lot of things that will take a long time. It's skills and education and all the rest of it. If you were still in the Treasury, what kind of things would you be thinking about doing to try and tackle that? Because unless you fix that, then it's going to be years and years of very sluggish growth.

I mean you're absolutely right, absolute truth about productivity is not only is there no quick fix. But also we don't really understand why productivity growth has slowed down, not just in the UK, but around the world. And we don't have a good model of you pull this lever and productivity growth will go up by this amount. We know the kinds of things we should be doing, and the UK has already been doing a lot of them, needs to do more, whether it's skills, investment in infrastructure, issues like housing are as much political, but also relevant to things like productivity.

But I think that for a Chancellor of the Exchequer, you have to separate this in a way into two boxes. You need to be ambitious on the things that you can do to try and raise the level of productivity growth in the long term. But you also have to face reality in the short term. And I think the Office of Budget Responsibility helps enforcing chancellors to do that. In the end, if we are growing more slowly than we used to, then we need to spend accordingly.

I have been criticising the OBR for quite a long time for not downgrading their forecasts. They've been consistently too optimistic and it seems from what we are told that they have finally bit the bullet. We have to assume as things are at the moment that our trend growth, particularly with the Brexit, is not much above 1%, 1.5%. That is a reality check. And the Treasury has to respond.

And that's it for this week's episode of "FT Politics." Thank you very much, George, Helen, Rupert, and Martin for joining us. We'll be back next week for another instalment. "FT Politics" was presented by Sebastian Payne and produced by Madison Darbyshire and Anna Dedhar. Until next week, thanks for listening.