UK’s Hammond may ‘reset’ policy in Autumn Statement

“We will have the opportunity with our Autumn Statements.to reset fiscal policy if we deem it necessary to do so in light of the data that will emerge over the coming months”, he said on a visit to Beijing ahead of a meeting of G-20 finance ministers in Chengdu.

Hammond is attending a weekend meeting of finance ministers from the Group of 20 economies at which counterparts will be keen to hear how Britain can pull off a smooth exit from the European Union while minimising the damage to the global economy.

The so-called purchasing managers’ index for Britain – a gauge of business activity closely watched by investors and policymakers – fell to 47.7 points in July from 52.4 in June.

Britain’s new chancellor, Philip Hammond, has said he could use the Autumn Statement to “reset” the country’s economic policy.

The data, collected between July 12 and 21, provides a stark picture of the state of the economy following the Brexit vote.

“July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009”, said Chris Williamson, chief economist at Markit.

The sharp contraction was triggered by falling output and orders for the first time since the end of 2012, while business optimism in Britain’s powerhouse services sector hit a seven-and-a-half-year low.

The flash United Kingdom manufacturing PMI was also in the doldrums, slipping to a 41-month low of 49.1 in July, after a reading of 52.1 the month before.

In the short term the Bank of England would be deploying monetary policy tools, he said- but went on to make clear that the government could fundamentally change direction to stimulate the economy.

“In the last few days alone we have seen the Australian Prime Minister say he wants a new trade deal with Britain – and Japanese technology firm Softbank announce plans for a record investment in the UK”.

The newly appointed finance minister said last week he would consider how quickly Britain should bring down its budget deficit, suggesting he would take a less aggressive approach to that of his predecessor George Osborne.