‘Brexit divident’ slated
SNAIL’S PACE: ECONOMIC GROWTH HAS SLOWED SINCE REFERENDUM
Labour leader says May’s figures ‘are so dodgy they belong on side of the bus’.
Derided as economically illiterate, government claims that Britain’s withdrawal from the EU will unleash a “Brexit dividend” are nevertheless enjoying a revival as the politically combustible process plays out.
Promising a shot in the arm for Britain’s much-loved National Health Service, Prime Minister Theresa May this week said the extra spending would be financed in part by savings once Britain exits the European Union.
That assertion – in essence, vote for withdrawal to save the beleaguered NHS – was the notorious selling point emblazoned on the pro-Brexit camp’s campaign bus prior to Britain’s June 2016 EU referendum.
Neutral observers and opponents to Brexit said the claim was divorced from financial reality. They have reiterated the point in response to May’s promise of an extra £20 billion ($26 billion, 23 billion euros) for the NHS, made Monday at the start of a crunch week of votes that will dictate parliament’s role in determining the final shape of Brexit.
“Her figures are so dodgy, they belong on the side of a bus,” opposition Labour leader Jeremy Corbyn said during a robust exchange in parliament with May on Wednesday.
The prime minister, however, doubled down in riposte to Corbyn, promising about £600 million a week extra for the NHS as a result of her policies.
“That will partly be funded by the money we no longer spend on the European Union,” she stated.
Yet the government’s own forecasts predict an economic slowdown, lower tax receipts and higher inflation linked to Brexit, and a shortfall in spending coming from Brussels on areas like farming will need to be plugged by London. So any savings would be wiped out, analysts argue.
“In the long run, lower growth just trumps whatever accounting gains you get from stopping EU contributions,” Fabrice Montagne, chief UK and senior European economist at Barclays, told AFP.
Since the referendum, according to official data, economic growth has slowed to a snail’s pace, inflation is high and hitting household incomes, while many businesses are holding back on investment.
That amounts to a major dent in the government’s tax take, one that is set to endure for years.
“There is no Brexit dividend,” Paul Johnson, director of the respected Institute for Fiscal Studies (IFS), tweeted.
Speaking on the BBC, he added: “There is literally, arithmetically, no money.” –