UK markets closed

Sajid Javid becomes chancellor — here's what to expect

Ben Gartside
Sajid Javid has been appointed as UK's new chancellor of the exchequer. Photo: Carl Court/Getty Images

Former home secretary Sajid Javid is Britain’s new chancellor.

New prime minister Boris Johnson appointed Javid after Philip Hammond resigned, alongside a number of other ministers. Following the conclusion of his leadership campaign, allies of Javid quickly built bridges with Johnson’s team in order to facilitate the now former business secretary staying at the top level of government, and encouraged speculation that he would suit a berth in Number 11.

During his campaign, Javid emphasised the importance of public services and distanced himself from the policies of former chancellor Hammond, saying that public services “aren’t just numbers on a spreadsheet, they are the beating heart of the country,” in reference to Hammond’s nickname of ‘Spreadsheet Phil.’

With the threat of a no-deal Brexit still looming, the experienced Javid is seen as a good choice by Tory MPs for chancellor. An MP who opposed his candidacy in the leadership election described him as a “steady, sound, and reliable” choice.

Those currently in the Treasury lean towards a positive outlook too: “He’d be a good chancellor if he sticks to his values on market liberalisation and immigration, but who knows,” said one, hedging their bets.

READ MORE: Hammond delivers loaded warning to Boris Johnson in resignation letter

Will Tanner, director of influential centre-right think tank Onward thinks the same. Speaking to Yahoo Finance UK about the likely trends of a Javid chancellorship, he said: "The new chancellor inherits more fiscal headroom and a stronger economy than either of his predecessors, but with fiercer headwinds too. He should pull out all the stops — investing in Britain's regions, building long-term infrastructure, and using every power at his disposal to attract high growth employers to the UK — to steady the economy through a period of political volatility."

A key reason for Javid’s appointment was his similar beliefs to Johnson in regard to Brexit, according to those involved in discussions. Outgoing prime minister Theresa May was well aware of the problems a chancellor could cause you via withholding spending or by briefing against the PM.

Sajid Javid leaves his London home on June 17, 2019 in London, England. Photo by Luke Dray/Getty Images

Despite their similar approach on Brexit, sources in and around the Treasury still believe a fight between Johnson and Javid over no deal is likely. “Is Javid just going to completely ignore all the ‘no deal’ warnings that will be sat in his in-tray?” one asked rhetorically. Javid is expected to ask at least one of Hammond’s senior advisers to stay in their role, meaning that some of this institutional opposition to no deal will remain.

Having previously been business secretary, Javid is well aware of the reach of the Treasury, and the clashes it has. A source who worked closely with him at Business said he would not back down from a scrap while chancellor, and said that scraps with Number 10 would be “inevitable,” especially given Dominic Cummings’ appointment. While some businesses initially felt his scepticism over having an Industrial Strategy was misplaced, Javid is seen as a man that big business could easily work with.

Both Johnson and Javid have quite similar policy positions and on paper should work well together, in a more similar way to Osborne and Cameron than Hammond and May — however inherited scepticism over no deal and potential unwillingness from Javid to be bounced into Johnson’s campaign spending commitments may drive a wedge between the two.