Leaving the EU: Economic Analysis

John Bercow Excerpts

Wednesday 28th November 2018 Commons Chamber

[The Financial Secretary to the Treasury (Mel Stride)]

Today the Government published the analysis of the economic and fiscal effects of leaving the European Union, honouring the commitment we made to the House. It is important to recognise that the analysis is not an economic forecast for the UK economy; it only considers potential economic impacts specific to EU exit, and it does not prejudge all future policy or wider economic developments. The analysis sets out how different scenarios affect GDP and the sectors and regions of the economy against today’s arrangements with the European Union. Four different scenarios have been considered: a scenario based upon the July White Paper; a no-deal scenario; an average free trade area scenario; and a European economic area-type scenario. Given the spectrum of different outcomes, and ahead of the detailed negotiations on the legal text of the deal, the analysis builds in sensitivity with effectively the White Paper at one end and a hypothetical FTA at the other.

The analysis shows that the outcomes for the proposed future UK-EU relationship would deliver significantly higher economic output, about seven percentage points higher, than the no-deal scenario. The analysis shows that a no-deal scenario would result in lower economic activity in all sector groups of the economy compared to the White Paper scenario. The analysis also shows that in the no-deal scenario all nations and regions of the United Kingdom would have lower economic activity in the long run compared to the White Paper scenario, with Northern Ireland, Wales and Scotland all being subject to a significant economic impact.

What the Government have published today shows that the deal on the table is the best deal. It honours the referendum and realises the opportunities of Brexit. [Interruption.] It is a deal that takes back control of our borders, our laws and our money. [Interruption.] Let me be very clear to the House and to those who say that the economic benefits of staying in the EU mean that we should overturn the result of the referendum: to do so would open up the country to even further division and turbulence, and undermine the trust placed by the British people in our democracy. What this House and our country face today is the opportunity presented by the deal: a deal that honours the result of the referendum and safeguards our economic future; or the alternative, the risk of no deal or indeed of no Brexit at all. [Interruption.]

[Mr Speaker]

Order. Somebody said something about “dishonest”. No Member should accuse another Member of being dishonest in this Chamber. I am not quite sure who I heard, but that must not be repeated. This is a disagreement between right hon. and hon. Members, and colleagues must remember that.

[John McDonnell]

The Chancellor promised us that the House would have a detailed economic analysis of the options ahead of the meaningful vote on Brexit. The least we could expect is that, instead of touring the broadcast studios, the Chancellor would be here himself to present an oral statement on the information.

Let us be clear. We are now in the ludicrous position of seeing an analysis produced today on the economic implications of Brexit, which is in fact largely an assessment of the Chequers proposals abandoned months ago. What the analysis produced by the Treasury today shows us is that if a no-deal scenario with no net EEA migration comes to pass—something the Government have recklessly, if incredibly, been threatening—we could see GDP almost 11% lower compared to today’s arrangements. Under the hard Brexit some Government Back Benchers have been promoting, it would be 7% smaller. Only a Chancellor who talks about “little extras” for schools would talk about this kind of effect as being “a little smaller”.

Can the Minister confirm that no deal is not an option the Government will allow to happen? Does the Minister agree that the one thing this document shows is that the deal on the table is even worse than the abandoned Chequers deal? Have the Government done any analysis whatsoever of the actual proposed backstop arrangements and will they be published in advance of the vote in a few days’ time? What fiscal assumptions is the Department making about extending the transition period, given that there may be no limit to what the European Union could ask for in return for such an extension? To be frank, if the Minister’s Government are not prepared to put jobs and the economy first in their Brexit negotiations, is it not time that they stepped aside and allowed Labour to negotiate that deal?

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[Several hon. Members rose—]

[Mr Speaker]

I inadvertently neglected to congratulate the right hon. Member for Leeds Central (Hilary Benn) on an important birthday on Monday, but I belatedly express the hope that he enjoyed himself, being fêted by family, friends and, as appropriate, his Select Committee—I call Mr Hilary Benn.

[Hilary Benn (Leeds Central) (Lab)]

Thank you very much, Mr Speaker. There was nowhere I would rather have spent my birthday than in the House of Commons questioning the Prime Minister on the Brexit deal, and I am sure that the same is true of the Prime Minister. On today’s urgent question, the Government are of course unable to analyse the political declaration because no one has the faintest idea about what kind of economic relationship will result from it, so instead, they have chosen to model the Chequers plan—the facilitated customs arrangements and the common rulebook—which has already been explicitly rejected by the European Union, which is why we have ended up with a vague political declaration. What is the purpose of trying to rest the Government’s case about minimising economic damage to the country on an option that the EU has already told us that it will not agree to?

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[Nicky Morgan (Loughborough) (Con)]

Let me start by saying that this economic analysis has been published at the behest of the Treasury Committee, but none of the three men called before me so far from the Government side is on that Select Committee. I say to the Minister that I was very clear in the letter that I wrote to the Chancellor of the Exchequer on 27 June, which is available on the parliament.uk website for any interested parties. I said:

“The long-term analysis should consider the economic and fiscal impact of… implementing the Withdrawal Agreement and the terms of the future framework”.

It is clear, sadly, that that is not what has been published today. It may be the case that it is not possible, as we have heard, to model particularly those agreements and the future framework, but that should then be explained to the House out of respect for the House. This is only the first part of the economic analysis to be published. We will have the Bank of England’s economic analysis at 4.30 pm and that of the Financial Conduct Authority, and then there will be various relevant witnesses, including the Chancellor, giving evidence to my Committee in the course of next week. So I say to hon. Members that, rather than leaping to conclusions about what is on the printed page today, we should all take the time to read it in detail—all 90 pages, and the technical amendment of over 70 pages—and the Bank of England’s analysis, and we should listen to the evidence given next week, then listen to the debate, and then we will make our judgments on 11 December.

[Mr Speaker]

Order. Before the Financial Secretary responds, and I note what the right hon. Lady said, I just say to the House that by contrast with the experience of earlier periods, during and indeed throughout my tenure, it has been my overwhelming and almost invariable practice—[Interruption.]—as the sedentary nod of the hon. Member for Wellingborough (Mr Bone) testifies, to call everybody in urgent questions and statements. That did not use to happen. It almost always happens with me, so if people would just be a little bit patient, rather than everybody thinking, “I am more important than the other person,” everybody will get in. I called the Father of the House and two Secretaries of State of some standing. [Interruption.] And the right hon. Member for Loughborough (Nicky Morgan) was a Secretary of State, but the Chair decides who to call and when, and I will always ensure that everybody gets a fair opportunity. It has to be that way. I have always treated the right hon. Lady with the very greatest of respect and I will always do so. I will also try to equalise the gender balance, but I hope that people will understand when I say that there are limits to what the Chair can do. The Chair also depends on who is present and who is standing. I am doing my best and I always will.

[Mel Stride]

I think my right hon. Friend the Member for Loughborough (Nicky Morgan) is entirely right in her exhortation to the House about the importance of making sure that we fully digest the two documents that are being brought forward—and indeed, as she suggests, the announcement that will be made by the Bank of England at 4.30 this afternoon—and that we in turn review very closely the evidence that the Chancellor and others give to the Treasury Committee. We do not want to make the kind of mistake that the Leader of the Opposition made when he dismissed our deal without even having read a word of it.

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[Several hon. Members rose—]

[Mr Speaker]

The hon. Member for Manchester Central (Lucy Powell) has a particularly beguiling approach to seeking to be called, which is to show that she has a bigger and more enthusiastic smile than any other Member of the House.

[Chris Bryant (Rhondda) (Lab)]

We can all do beguiling.

[Mr Speaker]

We can all do beguiling, but—well, we will leave it there. Lucy Powell.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

Thank you very much, Mr Speaker. I always thought that my teeth were one of my better features.

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[Several hon. Members rose—]

[Mr Speaker]

Ah, yes, the hon. Member for Nottingham East (Mr Leslie); he is a patient and laid-back fellow.

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

Thank you, Mr Speaker—I think.

On reflection, it was probably quite wise of the Chancellor not to come here to give this statement. He definitely owes the junior Minister a stiff drink afterwards, because he is not waving, but drowning, especially as in this dodgy prospectus he has essentially admitted that we will not know on what free trade agreement the country is being asked to vote on 11 December. Does he not realise that the reason so many Members will not buy the dodgy sales pitch he is peddling today is that nobody is convinced about this Brexit lottery and just being told “Have faith, keep your fingers crossed, go with us in this giant leap in the dark”?