Carl Mortished: Hammond looked across the Atlantic - and turned back

Forget those poor Northerners, the just-about-managing, the strivers or even the spongers. Who is it who feels a tiny bit reassured after the Chancellor’s Budget?

Look no further than your London-based middle-ranking eurotrash professional. Françoise is sitting next to you on the Tube. She’s been fretting about Brexit, about residence permits, about a place for her daughter in a bilingual primary school, and her husband’s job — what if the bank moves the London back-office team to Frankfurt? “Quelle horreur, living with les Boches [Germans to you and me]. Or worse, Luxembourg, where is that?”

Out of the blue comes a little present from Phil, such a nice man with such awful colleagues. With her husband’s bank salary and her part-time accountancy earnings, they have a joint income in six digits, which doesn’t go that far in London. But, quelle joie, the Chancellor’s tweak to the higher-rate tax thresholds means that Françoise will have an extra £1000 in the kitty. Perhaps Brexit won’t be so bad, after all.

That’s the message, or at least one of the messages, the Chancellor wants to get out there among Londoners and the vast population of foreign investors who live and work in the capital, who drive so much of Britain’s wealth generation and who worry about Brexit.

Since the summer, the Treasury has been leaking tales about the coming change in fiscal orientation. The view was that the bad times were over, the “sunlit uplands” were on the horizon, thanks to an unexpected bounce in government tax revenues.

However, we were still in the dark as to how a post-Brexit Britain would really look. Would the UK become a low-tax, low-spending, more deregulated business haven? The sort of place beloved of hedgies, US multinationals and the restless, globally rich. Would it perhaps, be fiscally favourable enough for Sir James Dyson to consider building an electric car factory here?

This Budget squashed any such daydreams. If we were poised for any change of direction, the Chancellor gave a hard look across the Atlantic and then turned back. In fiscal terms, Britain is facing towards Europe, and for the removal of any doubt, he let off a squib, a Halloween spoof to remind American investors that the current philosophical orientation of this Government is still firmly European.

The digital sales tax is a bit fuzzy. We don’t yet know which revenues will be targeted and how the threshold of £500 million in global revenues will be assessed. The suggested income to be generated, some £400 million annually post-2020, doesn’t amount to much when you consider the size of the targeted companies — Google, Facebook, Amazon et al.

That is not the point — this is a flag-waving exercise, not a revenue-generating scheme. The Chancellor is telling anyone who is interested that the UK has no intention of becoming the offshore headquarters for America’s tech giants from which they can dump their products tax-free around the world.

The Treasury said it will set aside its digital tax proposal if a global solution is agreed by OECD members. In other words, a firm commitment to tax the biggest multinational companies that do business over the internet, whatever the outcome. It’s an aggressive move and it won’t be liked in Washington.