Can someone please tell HM Treasury that the referendum is over? During that campaign, it made history by producing a claim that Brexit would make people £4,300 worse off per household. It was nonsense, debunked here at the time. It was not just a porkie, but a historic porkie: polls showed just 17 per cent believed this figure, around the same number that think Elvis is still alive. Even Sir Will Straw, head of the Remain campaign, admitted later that his case was actually damaged by this ridiculous campaign. The Treasury ought to be holding an inquiry into how such a wilfully misleading figure was eve produced by the civil service, and ever signed off.
But instead, the Treasury is at it again. Today’s Times reveals yet another figure from the ministry of made-up Brexit statistics: leaving the EU could be as much as £66bn in lost tax – that’s £20bn more than Britain’s annual defence budget and almost 70 per cent of the amount spent on education each year. A lot of money by anyone’s calculation and a stark warning to Leavers celebrating Theresa May’s tough stance on Brexit. But, unfortunately, it comes from the same people who made what must be the least believed dossier to have come out of Downing Street since…well, the last dodgy dossier.
If Brexit made one thing clear, it showed that it’s difficult to make predictions about what happens in the short-term. But while today’s report hasn’t been officially published, it suggests the Treasury is up to its usual tricks. Here’s an extract:
‘The Treasury estimates that UK GDP would be between 5.4 per cent and 9.5 per cent of GDP lower after 15 years if we left the EU with no successor arrangement, with a central estimate of 7.5 per cent.’
Its tricky to know where to begin to tackle the glaring assumptions offered up here. First of all, giving an estimate of what will happen in 15 years’ times is obvious nonsense given what difficulty economists had predicting the rest of this year. What’s more, even the most pessimistic Remainer would find it hard to imagine that no kind of ‘successor arrangement’ could have been agreed by 2031. It’s also disingenuous to settle on an in between figure of 7.5 per cent, purely because it falls between an overly pessimistic figure of a near ten-per cent drop in GDP and a somewhat less doom mongering (though still far from optimistic) figure of five per cent.
While no one knows what Britain’s economy will look like by 2031, we can try and form a picture of the economic outlook since the Brexit vote. And when we do this we realise the picture so far is far from gloomy. Retail sales are up, showing consumers are confident about the future, the FTSE is pushing towards a record high, showing investors are broadly happy, and the Purchasing Managers’ Index is also painting a reassuring picture from those in the know. As if that wasn’t enough, forecasters are now falling over themselves to up their predictions of how much Britain’s economy will grow in 2017 – with ten city heavyweights doing just that last month.
But the Treasury report doesn’t stop there. It goes on to say:
‘In headline terms, trade would be around a fifth lower than it otherwise would have been; foreign direct investment would also be around a fifth lower and the level of productivity would be driven down by these reductions in the economy’s efficiency in the long run.’
For the benefit of doubt, this is a leaked document which will have to pass through the hands of Theresa May before it properly sees the light of day. And, hopefully, it’ll end up shredded by those who think the civil service ought to produce a higher standard of analysis (it’s highly unlikely that the Office for Budget Responsibility would have put its name to such a report). But it’s a worrying sign that the Treasury is still fighting the old war.
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