OFFICIAL: WE WILL THRIVE OUT OF EU
Treasury admits Britain’s economy is surging ahead
UK business is booming after the Brexit vote, the Treasury revealed yesterday.
In a dramatic reversal of pre-referendum gloom, top economists told the Chancellor Philip Hammond that national output will continue to grow
this year. On average, the economists expect growth to continue at exactly the same rate as forecast before the EU referendum.
The verdict, by dozens of independent experts in a monthly analysis prepared for Mr Hammond, was a major departure from earlier expectations that Britain’s decision to leave the EU would deliver a massive shock to the economy.
In fact the data suggests that the historic vote has had no significant impact on growth at all.
It was seen as yet another blow to the scaremongering “Project Fear” campaign by those wanting to retain Britain’s EU membership.
Buoyant
And it came amid growing expectations in the City that the Government is preparing a “hard Brexit”.
That will mean quitting the EU single market and imposing full border controls.
Tory MP Craig Mackinlay, who backed the Leave campaign, said: “In just three months Project Fear has descended into Project Farce.
“Contrary to what economists and big banks like Goldman Sachs said, Brexit has heralded a new wave of growth as Britain prepares to unshackle itself from Brussels.
“With new global free trade deals on the horizon the British economy has never looked so buoyant.”
And Richard Tice, chairman of the Brexit-backing pressure group Leave Means Leave, said: “Every week more data shows that Project Fear was a pack of lies.
“Prospects are looking good for British business since British voters backed Brexit in June. Demand in the financial services sector is up and UK manufacturing has become a global contender once again.”
Mr Tice urged Prime Minister Theresa May to trigger the formal process for leaving the EU by invoking Article 50 of the Lisbon Treaty as soon as possible.
He said: “The Government should invoke Article 50 at the soonest opportunity to maintain momentum and strengthen business confidence further.”
Each month, the Treasury collects forecasts from more than 30 leading independent financial bodies including City banks, think tanks and universities before publishing an average of their predictions.
The first monthly average after the Brexit vote on June 23 downgraded the growth forecast for 2016 from 1.8 per cent to 1.5 per cent.
But the latest Treasury comparison revives the original 1.8 per cent growth forecast for the year.
The experts still expect the economy to slow down next year, but are increasingly revising those forecasts upward. In July, the average prediction for growth in 2017 was 0.5 per cent but that figure has nearly doubled to 0.9 per cent in the latest Treasury comparison.
The data emerged as a leading spokesman for the financial services sector hailed the “opportunities” ahead following Brexit.
Miles Celic, chief executive of lobbying organisation TheCityUK, told a fringe meeting at the Labour conference in Liverpool that leaving the EU would open up trade.
He said: “In terms of the opportunities we could look at doing more with other parts of the world.
“It is an opportunity for doing more with the US, Australia and Canada. We can also look at opportunities in places like Asia, the fastest growing part of the world, Africa and Latin America. I do wonder whether we have made as much of those relationships and partnerships as we might have done.”
Mr Celic also warned against people in the financial sector pushing for a re-run of the referendum.
He said: “One of the most important things to recognise is that the people have spoken.
“People may have felt very positive about or they may have felt very negative about it but the direction has been set and it is now for the Government, industry and others to
deliver on that.” Investment bank UBS, which was not part of the Treasury survey, also raised its forecasts because “the economy is proving resilient”.
Dean Turner, an economist in the bank’s chief investment office, said: “The economy appears to be performing better than feared thanks to resilient consumers.”
He also praised “the swift appointment of Theresa May as Prime Minister, which prevented a prolonged political vacuum”.
He added: “Forceful intervention from the Bank of England with a comprehensive monetary easing package should also help.”
In the longer-term “many opportunities beckon in markets outside the EU”, he said.
But negotiating access and reorienting the economy to take advantage will take years. Such change could prove disruptive, he added.
Limited
Experts believe the current business optimism may partly be due to exporters benefiting from the fall in the pound’s value after the Brexit vote, while importers have yet to pass on extra costs to consumers.
Jonathan Loynes, of Capital Economics, said: “One possibility is that positive developments which we expected to cushion the impact of the referendum have been felt before major adverse consequences.
“But that does not mean that the economy’s health is certain to deteriorate dramatically. Inflation will rise but we think the magnitude and duration of the increase will be relatively limited.”
Mr Loynes also predicted that exports will keep picking up and the Chancellor may try to simulate the economy with extra borrowing and spending on infrastructure.
Next year’s slowdown “should be limited and soon followed by a renewed recovery”, said Mr Loynes.
HISTORY, I suspect, will not be too harsh on David Cameron, a prime minister who in spite of other failures successfully led Britain out of a financial crisis. But that could all change if he, his friends and his former aides carry on the way they are going.
Theresa May has yet to complete three months in Downing Street. At this stage her predecessor should be lending her all the support she needs, or if he feels he can’t do that he should at least keep quiet. He only has to ask himself: how would he have felt had Michael Howard, his forerunner as Conservative leader, spent the first few months of his leadership sniping from the sidelines?
While Mr Cameron may appear to be keeping a dignified silence, those in his circle are engaged in what is beginning to look like a campaign to try to undermine Mrs May.
First, his former communications officer Sir Craig Oliver – that his former chief spin doctor was knighted in Cameron’s resignation honours is itself a poor reflection on the former prime minister – claimed in a memoir of his time in Downing Street that the Remain campaign regarded Theresa May as an “enemy agent”.
Then hardly a day later followed another book alleging that Mrs May had blocked Cameron’s plan during his renegotiation on Britain’s membership of the EU to demand an emergency brake on migration. The book, by journalist Tim Shipman, quotes sources close to Mr Cameron. The former PM, they claim, referred to May as “lily-livered” on migration.
IT DIDN’T take long for Number 10 to rebut the claims. Officials produced two letters written by Mrs May to Mr Cameron during the period of the EU negotiations in which she specifically demands that the Government hold out for an emergency brake on EU migration. Mr Cameron’s allies, they claim, are twisting Mrs May’s tactical advice as to what to include in one specific speech.
It is often no easier to work out what goes on in Number 10 than it is to establish what goes on inside the notoriously secretive Kremlin. But I know which piece of evidence I prefer: Mrs May’s letters, not the secondhand title-tattle put about by Mr Cameron’s cronies. It would be extraordinary, given everything that Mrs May said, wrote and did about migration during her years as home secretary, if she had suddenly changed her mind.
In any case, if Mr Cameron had wanted to bring up the subject of an emergency brake with Angela Merkel and other EU leaders why didn’t he do so? It was his negotiation and his decision how he went about it. He didn’t have to heed the advice of his home secretary or any other individual in his government. The truth is that it was he who failed to extract an emergency brake on EU migration. Of course I wasn’t present during the closed discussions during the early hours in Brussels in February but from the outside it looks as if he hardly tried. Instead he simply applied the term “emergency brake” to proposals to delay the payment of benefits to EU migrants – and pretended that this had addressed the subject of migration.
For a prime minister who had come to office promising to limit migration to “tens of thousands” a year it was never going to convince anyone. It was obvious that such a target could not be achieved without serious reform of the EU’s rules on free movement.
No amount of spin will overturn the failure which cost Mr Cameron his job as prime minister. He promised us a meaningful renegotiation of Britain’s terms of membership of the EU and told us that if he didn’t get one he would campaign for us to leave.
He didn’t get any substantial concessions from the EU and yet he campaigned for a Remain vote nonetheless, trying to frighten us in the process that Europe could descend into economic Armageddon and even a third world war.
It was pathetic and inevitably the British electorate saw through it. He might feel aggrieved at the premature end to his political career but really he has no one to blame except himself.
ALL along Mr Cameron’s problem was that he never outgrew the public relations man that he had been before being elected to Parliament. Even more so than Tony Blair before him, he saw the job as prime minister as being as much about news management as about achieving anything real.
The EU referendum was a prime example. When he announced the idea in his Bloomberg speech in January 2013 he hadn’t properly thought through a strategy.
He needed a way to silence Eurosceptic opinion within his party and hit upon the idea of holding a referendum at what seemed like a far-off date.
He maybe never thought that he would one day have to sit down with EU leaders and fulfil his promise. There was after all a general election due to be held between the Bloomberg speech and the promised referendum. He wasn’t expected to win it and promises of an EU vote could easily be dropped during coalition negotiations.
Having been hoisted by his own petard the best thing Mr Cameron can do now is accept what happened with good grace. Anything else and he risks going down like Sir Edward Heath who spent the last 30 years of his life sulking.
Obviously Mr Cameron can’t control everything his friends and allies say but he should use his influence to stop them trying to rewrite history on his behalf.
‘He failed to tackle EU immigration’