Brexit economic forecast furore:

Baker apologises after accusing officials of making grim forecasts to keep Britain in customs union

A BREXIT minister suggested yesterday that Treasury officials developed bleak economic forecasts about leaving the EU in an attempt to try to keep Britain in the customs union.

Steve Baker said he had been told about an “extraordinary” claim that the Treasury had developed a biased economic model to influence policy, which would represent a significant breach of civil service impartiality.

He later apologised after a recording appeared to contradict his account.

In the Commons, Jacob Rees-mogg, a Eurosceptic Tory MP, had asked Mr Baker if he had been told by Charles Grant, the head of the Centre for European Reform think tank, about the analysis. He said: “Will the minister confirm that he heard from Charles Grant that officials in the Treasury had deliberately developed a model to show that all options other than staying in the customs union were bad and that officials intended to use this to influence policy? If this is correct, does he share my view this goes against the independence of civil service?”

Mr Baker responded: “I’m sorry to say that my honourable friend’s account is essentially correct. At the time, I considered it implausible. My direct experience is that civil servants are careful to uphold the impartiality of the civil service. I think that we must proceed with great caution in this matter.”

Mr Grant and other MPS who had attended the event then questioned Mr Baker’s account, and a recording of the event, published last night, showed that Mr Grant said: “The Treasury is determined to stay in the customs union. In private, Treasury officials said that we know we’re going to stay in it during the transition, and we hope that when we’re in the transition, people will understand that the costs of leaving are rather high.

“There is unpublished papers in the Treasury showing that the economic cost of leaving the single market and the customs union are much greater than the economic benefits of doing trade agreements with anywhere else in the world.” Mr Grant said: “I told Mr Baker that I was aware of work in the Treasury demonstrating that the economic benefits of free trade agreements with other countries would be significantly less than the economic costs of leaving the single market and customs union.

“I did not say that the Treasury intended to use this to influence policy or deliberately developed this model with a view to influencing policy.”

Last night Mr Baker responded to questions over his account by saying he had answered the question based on his “honest recollection” of a conversation and he was happy the record had been set straight. Downing Street defended him. Mr Baker also apologised to Mr Grant after the audio corrected his recollection of events.

Liam Fox, the International Trade Secretary, who is in China with the Prime Minister, urged party colleagues to regard her as highly as he said she was there. He said: “I wish more of my colleagues have seen the sort of leadership and positive agenda that has been projected for Britain here in China.”