UK Economy: Post-Referendum Assessment

Gerald Howarth Excerpts

Monday 23rd May 2016 Commons Chamber

[Mr Gauke]

The hon. Lady’s point is particularly significant because of the long-term impacts. It is very clear to any of us who engage with those who invest in the UK—businesses that make decisions on where to locate investment—that access to the single market is an important attribute for the UK. It is clear within the report that business investment would fall significantly in both the short and long term as a consequence of leaving the EU.

[Sir Gerald Howarth (Aldershot) (Con)]

Leaving aside the Treasury’s notorious incompetence at forecasting, does my hon. Friend—for whom I have a lot of time, normally—not agree that this document really does plumb new depths in “Project Fear”? The Government are trying to scare the public witless. If the consequences are so dire, why on earth did the Prime Minister say on record that Britain could prosper perfectly well outside the EU? Why do the Government, through this report, say:

“as our economy transitions to a worse trading arrangement with the EU.”?

Does my hon. Friend not accept that that is utterly dishonest? The Europeans export £72 billion more to us than we export to them, so it will be in their interests to do a deal with us. And we will have a Government far more capable of negotiating than the present Government have been able to do.

[Mr Gauke]

First of all, may I say that I have an awful lot of time for my hon. Friend normally, but that I disagree with the points he makes? On trading arrangements, it is impossible to see how we could negotiate a trading arrangement as strong as the one we have at the moment. Access to the single market and its benefits, particularly in the context of non-tariff barriers, is very important. We would undoubtedly be a less open economy as a consequence of leaving the EU.

On the report and trying to scare people, it is worth pointing out the Treasury’s assumptions and what the Treasury is not suggesting is underlying what will happen. We are not putting forward a view that there will be an immediate financial crisis—for example, a current account crisis. We are saying that we can reach a deal within two years, which, I have to say, is ambitious. We are not saying, under the shock scenario, that there would be any economic contagion as a consequence of the UK leaving the European Union. If we wanted to put a much more dramatic, scary report together, there are a number of things we could have included in the report, but simply did not. This was a cautious, careful, small “c” conservative report, which, as I say, has been signed off by perhaps the leading authority in this area in this country.