UK Economy: Post-Referendum Assessment

Chris Leslie Excerpts

Monday 23rd May 2016 Commons Chamber

[Mr Gauke]

The Treasury—indeed, some of the same civil servants—was involved in making the assessment of the five economic tests that kept us out of the euro. I suggest that my hon. Friend looks carefully at the report. We do not make any claims of the sort he suggests—about it being the greatest depression since the great depression of 1929—but suggest that the “shock” scenario involves the economy shrinking by 3.6% compared with the base, which is the forecast for the next few years. This is actually a very measured, conservative assessment of the impact, but none the less there would be an impact and it would result in 500,000 more people being unemployed than need be the case.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

When does the Minister think that those advocating leaving the EU will level with the British public and provide their own economic assessment? Half of them think we can leave the EU and stay in the single market and the other half say, “Oh no, we won’t be part of the single market at all.” Is it not useful, therefore, that today’s analysis gives a snapshot of what a “severe shock” would look like if we were still in the single market? Will he also say a bit more about the “severe shock” analysis—falling back on the WTO membership rules—and how it could lead to 800,000 more people becoming unemployed?

[Mr Gauke]

The hon. Gentleman is right that under the more severe shock scenario, unemployment would increase by 800,000 and GDP would be 6% lower than it would otherwise have been. These are significant numbers. They are not equivalent to the great depression, but they are still significant numbers that would have a significant effect on his and my constituents. The hon. Gentleman raises an important point, and I hope we will get greater clarity about exactly what leaving the EU would involve. It seems to me that there is a clear trade-off: the closer a country is to membership of the EU, as for example with the European economic area model, the more it will continue to have the attributes of EU membership; the further away it is, it may have that greater freedom and flexibility, but it will clearly face a much bigger economic shock.