The document is official, up to date and damning about a major government policy. Predictably, therefore, the government’s response on Tuesday was to dismiss its own EU exit analysis as being of no account whatever. But how can this be so? The document leaked to Buzzfeed this week was prepared this month, January 2018. It deals with the economic cost of leaving the European Union. And it contains no scenario for Britain after Brexit that does not leave the country worse off than it is now.
We do not know – partly because the government will not say and partly because it is divided on the answer – what kind of economic relationship Theresa May wants with the EU after Brexit. But the Whitehall document models three distinctly different scenarios. In the first, with no deal, UK economic growth would be 8% lower over the next 15 years than currently projected. In the second, a comprehensive free trade agreement with the EU, growth would be 5% lower. In the third, with Britain remaining, Norway-style, in the European Economic Area, growth would be lower by 2%. Remember also that the trend against which these figures are calculated is itself already well below the pre-2008 crash trajectory.
The impact, in other words, would be bad, worse, or worse still. These would be the only choices. There would be no good economic impact. Almost every sector of the economy included in the analysis would be negatively affected. So would every region of the UK. The civil service authors spell these sectors out in clear terms: chemicals, clothing, manufacturing, food and drink, motor cars and retail. These are all major sectors, generating large numbers of exports, jobs and taxes to pay for public services. All will decline, making it even harder to invest in schools, infrastructure and the NHS. The hardest hit regions would be the north-east, the West Midlands and Northern Ireland.
But all this would be offset by all those free trade deals with the rest of the world, would it not? Dream on, for here the nightmare gets worse. Even if Britain made a bilateral trade deal with the US and was able to roll its EU-secured global trading terms into other bilaterals, the impact would be tiny. A trade deal with the US – which since the US is the stronger economy would be concluded on terms favourable to America – would be worth an extra 0.2% to the economy in the long term. Trade deals with other countries like China (where Mrs May arrives on Wednesday), India, Australia, the Gulf states and those in south-east Asia would add 0.1% to 0.4% all taken together.
Challenged on these assessments in the Commons on Tuesday, the Brexit minister, Steve Baker, was utterly cavalier. The Buzzfeed story was a selective interpretation of a preliminary analysis, he said. Yet even if that charge is right, these findings are not just shocking but wholly at odds with the government’s message. Not surprisingly, several Conservative MPs joined the opposition parties in giving voice to completely legitimate concerns about the impact on the country and their own voters. Brexit stirs passions that are hard to alter. Many want Britain to move on. The public’s cynicism towards politics amid cheap claims about fake news and project fear makes reasoned debate on things like impact assessments difficult. When low paid work pervades too many lives, dire warnings about “the economy” can sound like a concern for the rich. Yet this assessment affects everyone. It makes it harder for a future government that was on their side to deliver. It would make poor Britons poorer. The government acts as if it has a blank cheque to vandalise the economy in Brexit’s name. The fight to stop that must not falter.
