Spend­ing watch­dog com­pares hard Brexit to three-day week

The Daily Telegraph - Business - - Business - By Anna Isaac The Daily Tele­graph:

THE pub­lic spend­ing watch­dog has com­pared the eco­nomic dam­age of a dis­or­derly Brexit to the three-day week im­posed in 1974, warn­ing of de­lays to im­ports and queues at bor­ders.

In this pe­riod out­put fell by 3pc over three months, as ef­forts to con­serve elec­tric­ity amid fuel short­ages – a re­sult of coal min­ing strikes – took a sig­nif­i­cant toll on in­dus­trial pro­duc­tion.

The OBR said: “A dis­or­derly exit might well re­sult in tem­po­rary con­straints on the sup­ply of some im­ported prod­ucts and do­mes­tic goods that con­tain im­ported com­po­nents.”

There could also be “bot­tle­necks” at bor­ders, and at­tempts by house- holds and busi­nesses to stock­pile ahead of time could “fur­ther ag­gra­vate” goods short­ages.

It added it was “next to im­pos­si­ble” to es­ti­mate the im­pact of a dis­or­derly Brexit on the econ­omy, but the dis­rup­tion of 1974’s three-day week was “worth not­ing”. Nicky Mor­gan, chair­man of the Trea­sury se­lect com­mit­tee, told “When the in­de­pen­dent OBR equates leav­ing the EU with no deal to the Seven­ties’ three­day week then any right-think­ing per­son must know they can’t in­flict such a sit­u­a­tion on their fel­low cit­i­zens.

“No deal would be a very bad deal,” she added. In the dossier of more than 100 pages, the Of­fice for Bud­get Re­spon­si­bil­ity, the in­de­pen­dent body that checks the Chan­cel­lor’s maths, has ex­am­ined sev­eral fore­casts of how Brexit will im­pact the UK econ­omy.

The pa­per said that the OBR lacks the de­tail needed for a mean­ing­ful fore­cast how a fi­nal Brexit deal will im­pact the econ­omy. In­stead it can only in­clude some “broad as­sump­tions”, such as a lower mi­gra­tion lev­els, in its as­sess­ments of gov­ern­ment fi­nances.

The OBR said: “Other things be­ing equal, the greater the bar­ri­ers to trade and mi­gra­tion flows with the EU as a re­sult of Brexit, the more ad­verse the prospec­tive im­pact on the econ­omy and the pub­lic fi­nances.”

It also noted that the ben­e­fits from trade deals gen­er­ated through an in­de­pen­dent UK trade pol­icy as a re­sult of quit­ting the EU, would, at best, not be felt for sev­eral years.

“The US has taken an av­er­age of al­most four years to ne­go­ti­ate and im­ple­ment its trade deals, China has taken an av­er­age of al­most six years and In­dia al­most seven years,” the OBR said.

As a re­sult, the OBR can­not in­clude any ben­e­fits from free-trade agree­ments in its near-term fore­casts. It can only pro­duce this work based on present gov­ern­ment pol­icy, not a trade agree­ment that “has yet to be ne­go­ti­ated” it said.

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