- Chancellor Philip Hammond publishes letter warning no deal Brexit would make the UK £150 billion poorer over 15 years.
- Hammond says leaving the EU without a deal would force the government to increase borrowing by £80 billion by 2033.
- Hammond published his letter just hours after Brexit Secretary Dominic Raab sought to calm fears over a no deal Brexit, claiming Britain would be better off in the long run.
- Conservative Brexiteers react with fury to Hammond’s latest intervention.
LONDON – Chancellor Phillip Hammond has issued further warnings over the economic harm of a no deal Brexit, warning that leaving the European Union empty handed would make the UK £150 billion poorer over 15 years.
Hammond’s latest Brexit warning comes only hours after Brexit Secretary Dominic Raab said that there would be “opportunities” from leaving with no deal and that a no deal Brexit would damage Britain only in the short term.
Hammond, who is often criticised of being pro-EU by pro-Brexit Conservative MPs, released a letter to Treasury Select Committee Chair, Nicky Morgan, estimating the potential cost of a no deal Brexit.
In his letter, Hammond said the United Kingdom’s GDP would go down by 7.7% over 15 years, and that the largest negative impact would be felt in the North East and Northern Ireland.
“GDP impacts of these magnitudes, were they to arise, would have large fiscal consequences. The January analysis estimated that borrowing would be about £80 billion a year higher under a no deal/WTO scenario by 2033-2034, in the absence of mitigating adjustments to spending or taxation, relative to a status quo baseline,” his letter said.
“This is because any financial saving is outweighed by the indirect fiscal consequences of a smaller economy.”
The Chancellor also announced more Brexit impact studies were on their way, and that further modelling had been done on different economic sectors in order to understand which will be worst hit by Brexit.
“Under a no-deal/WTO scenario, chemicals, food and drink, clothing, manufacturing, cars, and retail were estimated to be the sectors most affected negatively in the long run, with the largest negative impacts felt in the northeast and Northern Ireland,” the letter published on Thursday said.
NEW: On the day Dominic Raab tried to reassure the UK about the consequences of a no deal Brexit, Philip Hammond has sent a bombshell letter to Nicky Morgan saying it would have 'large fiscal consequences'. Cat meet pigeons. pic.twitter.com/ohc413oePv
— Jack Maidment (@jrmaidment) August 23, 2018
Hammond’s letter reignites Tory Brexit war
Hammonds’ intervention triggered angry responses from Brexiteers, who accused the Chancellor of deliberately overshadowing Brexit Secretary Raab’s speech on the government’s no deal preparations.
Speaking to The Times, head of the pro-Brexit grouping of Conservative MPs Jacob Rees-Mogg said: “The treasury just can’t stand being humiliated. It was wrong during the campaign and is even more wrong now. The fact is neither the chancellor nor the Treasury wants to leave the EU so they repeat themselves ever more noisily.”
- Reuters / Simon Dawson
Hammonds predictions were further criticised by Conservative MP Marcus Fysh, who tweeted: “[It] Seems the Cabinet hasn’t yet bothered to sort out the Treasury’s sub standard work I criticised nearly 6 months ago…This is proof it is nothing but scaremongering and it’s shocking the proponents are still in post.”
Meanwhile, The Telegraph reports that both Theresa May’s office and Dominic Raab were furious with Hammonds’ letter, claiming that it was not signed off by Downing Street.
“This was a deliberate intervention by Philip, he knew exactly what he was doing.”