Philip Hammond launches attack on populist politics

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Chancellor Philip Hammond has launched an attack on populist politics, warning that there was "no sustainable future" in protectionism, subsidies and high debt.

His comments may be seen as a criticism of positions set out by US President-elect Donald Trump during his election campaign, when he promised to implement protectionist tariffs and borrow for infrastructure investment as part of his mission to "make America great again".

Speaking at a business lunch at the World Economic Forum in Davos, Switzerland, Mr Hammond acknowledged that the political upsets of 2016 - including Mr Trump's election and Britain's referendum vote for Brexit - were in part driven by worries about globalisation and technological change.

But he said it would be wrong to respond by retreating from the free trade system.

"Politicians who take the populist route will find it a very short road," said the Chancellor.

"There is no sustainable future for a developed economy in protectionism, subsidy and high debt.

"So whether it's on restoring the public finances to health, getting the right Brexit deal for Britain or tackling the long-term productivity challenge facing our economy, this Government is providing the responsible economic leadership that our country needs.

"That means facing up to the fact that we have some hard graft ahead. There are no easy answers. Populism is a fool's paradise."

Speaking on the eve of Mr Trump's inauguration as President, Mr Hammond said there was no doubt that an anti-establishment and anti-globalisation mood was a factor in the electoral upsets of 2016 and the rise of populist parties in countries across Europe.

But he said it was vital for the UK to remain "an open economy and an outward-looking society".

"I do not doubt that a section of the population is disillusioned by the obsolescence of their skills and the stagnant real wages that implies, and happy to kick the political establishment when given an opportunity to do so. And we, as politicians, need to hear that message and react to it," he said.

"But it's a big step to say the UK electorate as a whole is fundamentally rejecting capitalism or globalisation. It isn't.

"Some of them were simply expressing a view on the European Union. And, of course, on immigration.

"As the Prime Minister has made clear, we need to show how we can build an economy - on the bedrock of our tried and proven system - that will work for everyone in an age not just of globalisation but of unstoppable technological change."