30 July 2019

Financial Times: Johnson plans ‘boosterism’ to ease Brexit pain

Boris Johnson arrived in Downing Street declaring that “there is cash available” and that he is ready to spend it. The new prime minister will embark on a new economic strategy known in Number 10 as “boosterism”.

Mr Johnson has already announced a plan to recruit 20,000 new police officers and within days he will promise to build new hospitals across the country. A multibillion-pound plan to fix Britain’s rotten social care system is expected in the autumn.

The prime minister has promised a new railway line between Manchester and Leeds, while chancellor Sajid Javid will this week set out plans to spend hundreds of millions of pounds more on preparing Britain for a no-deal Brexit.

“Boosterism is a cool word, I think it will stick,” said one ally of Mr Johnson, saying that the prime minister wanted to put “rocket boosters” under the economy by finally ending a decade of austerity and preparing for Brexit.

In its usual American usage, “boosterism” means talking up a city or region. Mr Johnson hopes that by pumping money into an economy teetering on the edge of recession and gripped by Brexit trauma, he can transform its prospects.

Mr Javid, who shares Mr Johnson’s enthusiasm for long-term investment to boost the country’s productive potential, is expected to pull the new strategy together in an autumn Budget and what is expected to be a one-year review of public spending.

Dominic Cummings, Mr Johnson’s adviser, is reported to have told special advisers to expect a Budget in the week starting October 7 — a date likely to be at the height of Brexit uncertainty — but Treasury insiders insist no date is set.

The new economic plan is only now taking shape, but Mr Johnson is clear it involves spending the £26.6bn “fiscal headroom” built up by former chancellor Philip Hammond to cushion the impact of a no-deal exit — an outcome that is still a real possibility.

However, this headroom is simply another way of saying higher borrowing: it is the Office for Budget Responsibility’s estimate of the extra amount the government could borrow while meeting its fiscal mandate to keep the deficit within 2 per cent of GDP. [...]

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