Brexit was the elephant in the room during Hammond's Spring Statement

We are, as Mr Hammond understands better than most, in the 'phoney war' phase of Brexit

“Tigger”, the Chancellor, Philip Hammond, calls himself, in the latest attempt to rebrand his “Eeyore-ish” image. During the course of the Spring Statement there was, despite the pre-publicity, much about it that was like a traditional long Budget statement. There were the jokes at Labour’s expense. There was a series of announcements about worthy, mostly uncontroversial initiatives and consultations, such as 5G, business rates, late payments to small businesses and taxing single-use plastics. There was also an inordinate amount of bragging – not so much Tigger as Toad of Toad Hall (to switch nursery stories): the longest sustained fall in borrowing, seven years of continual growth, record employment, another £60bn for public spending even since 2016, the 2018 growth forecast revised upwards, a technological revolution at hand, freezing fuel duty, a Britain that works for all… on and on he went. The Chancellor even managed to make the phrase “light at the end of the tunnel” sound triumphalist.

Still, in the 26 minutes he spent on his feet praising his Government’s past record, Mr Hammond said as little as possible about the future economic challenge that dwarfs and frames all others: Brexit.

This was understandable. He, like the sensible politician he is, wants to avoid answering the unanswerable questions about Brexit, and the fewer opportunities he presents to place himself into such a predicament the better. Inevitably, the temptation would be for him to “slap down”, in newspaper-speak, Boris Johnson or Jacob Rees-Mogg, or, less severely, Anna Soubry and Nicky Morgan, which is really not what Mr Hammond wants to get bogged down in.

Apart from that, there genuinely isn’t much to say, pre-Brexit, because so much is still hanging in the air. The modest upgrades to economic forecasts and encouraging news on stronger public finances are all very well, but the British economy today is in an unreal, almost dreamlike, state.

We are, as Mr Hammond understands better than most, in the “phoney war” phase of Brexit. There have been a few inconclusive skirmishes around the Irish border and the EU citizens’ rights, plus a few light raids on the customs union and single market, but the Brexit blitzkrieg, the all-out diplomatic warfare between the EU and the UK (“Brexkrieg” maybe) on the big issues is yet to break out.

For the time being, in other words, and despite all the speculation, the UK is firmly inside all of the EU’s economic structures, and there have been only two Brexit effects so far. On referendum day, there was a sharp depreciation in the value of sterling, since somewhat reversed.

The other effect, less visible, and unmentioned by the Chancellor, is that many businesses, especially those reliant on EU markets – with the City, aviation and the car industry the outstanding examples – have been putting off investment decisions. This has depressed growth to a level lower than it would otherwise have been, and damaged the economy’s future growth capacity.

On the other hand, a buoyant world economy, with unusually synchronised growth everywhere from China to America, has helped stabilise the UK economy – as the dread phrase goes, “despite Brexit”, or, more accurately, “despite the prospect of Brexit” because, of course, Brexit has not yet happened. Mr Hammond chose not to highlight this important factor in his speech, attributing the improvements instead entirely to Conservative prudence. It was a Toad-like and partial account of recent economic history, in every sense.

It would have been better if the Chancellor had assumed his usual anhedonic demeanour, and addressed the prospects for the next few years not in marginal movements of fractions of a decimal point in financial aggregates, but in terms of the real squeeze on living standards and public services that will ensue.

As has been well noted, whatever the opportunities presented by Brexit turn out to be one day, there will inevitably be disruption – friction if you will – on the way.

The extent of these short-term economic changes cannot be easily predicted, but they will be negative. Of course, not all trade with Europe – an exchange of people and goods that has been going on for millennia – will grind to a halt, and the UK become as isolated as North Korea. But things will alter, and trade will necessarily have to tilt towards the rest of the world. A further depreciation of sterling would help, other things being equal, which means higher inflation than otherwise, and higher prices. Again, that may turn out to be dramatic or muted, depending on how trade with the rest of the world and global economic growth proceed – all unknowables. Mr Hammond stayed shtum about any of that.

In the short run, even if the prospect for a decade or two’s time are rosier being outside the supposedly sclerotic EU than inside, in the adjustment process there will be lower investment, fewer new jobs and lower living standards than if the UK stayed put. It is something few Brexiteers have had the guts to tell people, and it is certainly not the sort of thing that one of the most reluctant Brexiteers in the Cabinet wants to say. Before long, though, he will have to confront reality. When he does, the nickname “Tigger” Hammond will not stick for long.