George Osborne tries to strike positive tone on Brexit
George Osborne was crushed on the morning of Friday June 24, his economic plan and his personal ambitions wrecked by the national vote to leave the EU. “I have had better mornings,” he told aides, as dawn broke on Brexit Britain.
Ten days on, Mr Osborne is back on his feet and ready for a new fight. His dream of becoming prime minister may be shattered, but he believes he can still play a vital role in restoring stability and confidence to the British economy.
In his first newspaper interview since the referendum, Mr Osborne told the Financial Times: “What’s done is done. The British public has spoken. We should accept their verdict instead of moping around or trying to unpick it.
“We have now got to be part of a supreme national effort to make it work for the British people. I’m going to do my best over the next coming months, then it’s up to the next Tory leader whoever he or she may be.”
The chancellor admits the country faces “very challenging times” and adds: “I don’t resile from the warnings I made about the impact — including a recession.” But after a week of shock, Mr Osborne insists he is looking confidently to a new horizon.
“I don’t think we should feel sorry for ourselves as a country,” he says. “We’ve got to pick ourselves up and make the best of it and make the most of it. I don’t sit here feeling sorry for myself, feeling somehow that it is all going to unravel. Quite the reverse.”
Mr Osborne says he has not decided who to back in the Tory leadership contest “at the moment”, although he will, as a political chess player, be gauging who is most likely to win and most likely to give him a role in shaping this new era for Britain.
Allies such as cabinet office minister Matt Hancock have already backed home secretary Theresa May, although relations between her and the chancellor are scratchy at best. She has refused to offer jobs to any of her potential backers.
Mr Osborne is said by senior Treasury officials to regard Mrs May’s pro-Brexit rival Andrea Leadsom as “hard working with strong views”, even if the two have crossed swords in the past. Treasury civil servants are less obliging about her talents.
In the short term he wants to make sure the Brexit shock does not produce a repeat of the credit crunch of 2007-08 and is meeting the banks and talking to the Bank of England to make sure lending does not seize up.
“It’s their judgment how they do that but they’ve got the tools at their disposal,” he says of the BoE’s Financial Policy Committee.
While BoE governor Mark Carney has talked about monetary loosening, Mr Osborne says he will do his bit by abandoning his threat of further post-Brexit fiscal tightening, although he will stick with measures already announced.
“I’m being realistic looking at the independent forecasts now for UK growth in the coming year or two,” he says. “We are unlikely to hit our surplus targets. But that doesn’t mean we abandon fiscal credibility.”
Stephen Crabb, the work and pensions secretary, will say on Monday that the government would borrow up to £20bn a year to spend on infrastructure projects, if he is elected Tory leader.
Mrs May pre-empted Mr Osborne by 24 hours in announcing that she would scrap the 2020 surplus target to avoid further austerity, suggesting that the two are on the same page on the public finances.
They are also striking very similar notes about the need for Britain to maximise access to the single market — including for services and financial services — while at the same time respecting the will of the British populace to restrict the free movement of people.
“The priority is getting our new relationship with Europe in place and right and that means putting the greatest emphasis on having the best possible trade in goods and in services including financial services,” the chancellor says.
Mr Osborne wants to pay the smallest possible economic price for the ability for Britain to control its own borders, but says: “Clearly you can’t have all the benefits of EU membership without any of the costs or obligations. There’s going to have to be reform of free movement of people because to ignore that would be, I think, to ignore one of the clear verdicts of the referendum.
“But we’ve got to make sure we’re as close as possible to our European allies and that they remain not just key friends and strategic partners but also a crucial export market.”
Mr Osborne, who has tried to make Britain China’s best friend in the west, plans to step up the courting of Beijing. “We’ve got to get on a plane and sell Britain to the world,” he says. “And for me that means putting more effort still into our relationship with China.” He will lead another trade visit later this year.