Both Boris Johnson and Jeremy Hunt have been told that if the country leaves without a deal, there will be no extra cash to cover the major spending pledges that both have announced.
Johnson wants to slash tax for people earning over £50,000 a year – a move that will cost an estimated £9 billion – as well as borrow to fund infrastructure projects. Meanwhile, Hunt wants to boost defence spending by £15 billion over four years, and cut corporation tax at an estimated cost of £13 billion a year in the short term.
But chancellor of the exchequer Phillip Hammond has warned that all the ‘headroom’ the candidates keep referring to will be needed to plug the hole a no-deal Brexit would inflict on the country.
He tweeted: “The ‘fiscal firepower’ we have built up in case of a no-deal Brexit will only be available for extra spending if we leave with an orderly transition.
“If not, it will all be needed to plug the hole a no-deal Brexit will make in the public finances.”
Both candidates have said they are prepared to take the UK out of the EU without a deal.
WATCH: Hunt criticised for saying he would back no-deal Brexit even if it leads to job lossesWhile Johnson has said we must “do or die” by leaving on October 31, Hunt said he would delay Brexit if a deal was on the horizon, saying he would only take the country out without a deal with a “heavy heart”.
Hunt has said he would consider cancelling the August holiday for civil servants working on no-deal preparations.
He told a gathering in Westminster: “We have built up headroom – around £26 billion of headroom – which makes it possible to make the commitments I’m making today.”
He added: “It is important that the EU knows that we will do what it takes to make a success of a no-deal Brexit. We won’t blink as a country. That no-deal Brexit is not going to be an opportunity for them to successfully turn the screws on our country.”