Chancellor accused of launching & # 39; another sinister Project Fear & # 39; about Brexit

Philip Hammond was faced with claims of launching a "dodgy Project Fear" when Tory's tensions over the brexit broke out after the Chancellor warned that no deal could cause major economic damage.

Brexit-backing Tories reacted furiously after Mr. Hammond pointed to the disputed preliminary analysis, released earlier this year, claiming that GDP could fall and about 80 billion pounds a year could be higher in 2033/34 in a scenario where Britain resorted to world trade took Organization (WTO) conditions because of no agreement with the EU.

Mr Hammond added that this first January analysis went through a "process of refinement" prior to a parliamentary vote on each deal, noting that scenarios with higher trade barriers with the EU are expected to have a "more damaging effect" have on the economy and public finances.

He also defended the government's preferred approach, which was outlined in a white paper after a cabinet stop at Checkers, saying that the economic and fiscal consequences would be "substantially better" than no deal.

Chancellor Philip Hammond warned that a no-deal Brexit could cause major economic damage (Brian Lawless / PA)

Eurosceptic Tories have opposed the government's proposals, which include a "common rulebook" with the EU on goods, amidst the fear that this could limit UK's ability to enter into trade agreements.

Mr Hammond's remarks in a letter to conservative MP Nicky Morgan, chairman of the Treasury Select Committee, came to the fore after Brexit Secretary Dominic Raab tried to downplay the chances of a no-deal Brexit, while at the same time ignoring the impact of such a scenario outlined through a series of technical documents.

Mr Raab also referred to the risks as 'potential short-term disruption' rather than as a longer term, contrary to what Mr Hammond has outlined.

Tory MP Marcus Fysh wrote on Twitter and referred to the earlier "dubious" predictions of the Treasury, before adding that the chancellor "was determined to turn them off again for a part of dodgy project fear".

Jacob Rees-Mogg, leader of the pro-Brexit European Research Group of Tory MPs, said on BBC Two's Newsnight: "I think a free trade agreement can be reached, but saying goodbye to the WTO is not as absurdly frightening as the Chancellor of the Treasury thinks so. & # 39;

He also said: "The Brexit panic of the Treasury means that you can no longer rely on the prognoses of the Treasury."

Hammond had written: "This preliminary January analysis estimated that in a no-deal / WTO scenario, GDP would be 7.7% lower (5.0% -10.3%) compared to a status quo baseline. This represents the potentially expected static condition around 15 years from the starting point.

"The analysis did not estimate the path that the economy and the various sectors could follow, and the potential for short-term disruptions."

Mr. Hammond added: "In a no-deal / WTO scenario, chemicals, food and beverages, clothing, production, automotive and retail were estimated in the long term as the sectors that were most negatively affected, with the greatest negative effects felt in the North East and Northern Ireland.

"The impact of GDP of this magnitude, if it were to emerge, would have major fiscal consequences.According to the January analysis, borrowing would be about 20 billion pounds a year higher in the context of a no-deal / WTO scenario in 2033- 34, due to the absence of mitigating adjustments to expenditure and / or taxes compared to a status quo baseline.

"This is because direct financial savings are compensated by the indirect tax consequences of a smaller economy.

It is expected that the economic and fiscal consequences of the White Paper model will be substantially better than that no agreement is reached, that jobs and livelihoods are protected and that both the UK and the EU are supported in order to avoid a hard border. between Northern Ireland and Ireland.
Chancellor Philip Hammond

"The first, cross-Whitehall analysis of January is currently undergoing a process of refinement in the run-up to a parliamentary vote on the deal.

"However, we expect the analysis to show that scenarios in which we have higher trade barriers with the EU will have a more damaging effect on the economy and public finances."

Mr Hammond continued his preference for the government: "The economic and fiscal effects of the White Paper model are expected to be substantially better than not to protect deal, jobs and livelihoods, and both the commitments of the UK and those of the EU for not support a hard border between Northern Ireland and Ireland. "

Pro-European Ms. Morgan said about the letter: "The Chancellor has confirmed that the government is predicting a disastrous blow to our economy and living standards in the event of a" no-deal "Brexit."

In New York, Secretary of State Jeremy Hunt said Britain was "cautiously hopeful" rather than "wildly hopeful" to close a Brexit deal.

Source link

Leave a Reply