Philip Hammond is still trying to stop our Brexit
BEFORE the EU referendum in June 2016 David Cameron did as Harold Wilson had done in 1975: he suspended joint Cabinet responsibility in order to allow ministers to campaign on either side of the debate. Once the result had been declared, normality returned and all Cabinet members became obliged once more to stick to policies which they had agreed.
One minister, however, has yet to get the message. The Chancellor, Philip Hammond, has remained in campaign mode ever since the referendum and continues to thwart the Government’s plans for Brexit. Why, otherwise, would he have chosen yesterday to send a letter to Nicky Morgan, who chairs the Commons Treasury Select Committee, claiming that a “no deal” Brexit will shrink the economy by 7.7 per cent relative to where it would otherwise have been in 15 years’ time?
The forecast was issued and published by Treasury officials in January. The only reason I can imagine for releasing it now was to distract attention from the 24 technical papers released by Brexit Secretary Dominic Raab yesterday on preparations for a “no deal” Brexit. The technical papers failed to detail any alarming consequences so instead Hammond’s letter has stolen the headlines – exactly as the Chancellor must have intended it.
Hammond did not want Britain to leave the EU and he has made it clear that neither does he accept the manifesto promise on which the Conservatives stood for re-election – of leaving the single market and the customs union.
IN A speech at the Mansion House just after the June 2017 election he stated fatuously that “when the British people voted last June they did not vote to become poorer, or less secure” – which was his way of saying Brexit voters couldn’t really have meant they wanted to leave the EU.
He was at it again at Davos this January: “We are taking two completely interconnected and aligned economies with high levels of trade and selectively moving them, hopefully very modestly, apart.” That required a counter-statement from Downing Street restating the Government’s policy of leaving the single market and customs union – which are hardly modest changes.
If Hammond truly believes Treasury forecasts that Brexit is going to be a disaster he does, of course, have the option of resigning and campaigning against it. Boris Johnson and David Davis resigned as Foreign Secretary and Brexit Secretary when they felt they could not support Theresa May’s Chequers proposals, so why is Hammond still there?
Whether anyone should believe the Treasury’s economic forecasts is another matter. As we know from experience it will bear absolutely no relation to what actually happens. Why on earth is the Treasury still making economic forecasts when its record is so abysmal?
In May 2016, a month before the referendum, the Treasury published a document claiming what would happen in the event of Britain voting to leave the EU. It put forward two possibilities. The first was a “shock” scenario in which GDP shrank by 3.6 per cent over two years – relative to where it would have been had we voted to Remain – and unemployment rose by 500,000. If we didn’t find that frightening enough there was also a “severe shock” scenario in which the economy shrank by six per cent and unemployment rose by 800,000.
The second anniversary of the Brexit vote has now been and gone and the Treasury has been shown to be laughably wrong. In fact the economy is 3.2 per cent larger than it was in May 2016 and unemployment is 330,000 lower – 1.36 million compared with 1.69 million.
The unemployment rate has fallen from 5.1 per cent to 4.0 per cent – the lowest rate in 45 years. So no, Chancellor, the British people didn’t vote to be poorer – and they haven’t become poorer, either.
This said, a “no deal” Brexit is not the ideal outcome. Far better is that we do a trade deal which allows us to trade with other EU countries on pretty much the same basis as we do now, while at the same time we become free to strike deals with countries outside Europe.
EVEN now, with talks bogged down and chief EU negotiator Michael Barnier losing no opportunity to frustrate proceedings, I still believe that this will be the most likely outcome. The EU has every bit as much incentive as we do to ensure frictionless cross-Channel trade.
But if it does come to no deal there is nothing in the documents released yesterday to justify the ever-more desperate horror stories which frustrated Remainers have been trying to spin. Importers and exporters have been advised that they might have to employ a customs agent. But apart from that?
When we use our debit and credit cards abroad we might face slightly higher charges as we would no longer benefit from an EU cap on charges. But we can get round that by paying with cash – even with the EU cap it still often works out cheaper to use that payment method when abroad.
Otherwise, the most serious implication laid out in these 24 documents is that cigarette health warnings will no longer be able to use the existing library of photographs of diseased lungs – as the copyright belongs to the European Commission. Big deal.
Project Fear failed to persuade the British people to vote Remain in the referendum; it is not going to succeed in overturning the result now. If Philip Hammond does not accept that, he should resign and make way for someone who does wholeheartedly support Government policy.
‘The Treasury has been shown to be wrong’