Government Brexit paper failed to model the most likely outcome, report finds

A GOVERNMENT assessment of the economic impact of Brexit failed to consider the most likely outcome of Theresa May’s deal, an influential House of Commons committee has found.

The Treasury Select Committee said it was “disappointed” that the Whitehall paper provided an analysis of the “Chequers” plan set out in the Prime Minister’s White Paper in the summer, but not the final deal reached with Brussels, which differed in many respects.

The 83-page document failed to analyse the potential impact of the backstop arrangements proposed in Mrs May’s deal, or to look at the short-term disruption caused by withdrawal from the EU.

The White Paper scenario set out in the document represented “the most optimistic and generous” interpretation of the Political Declaration agreed with the EU on future trading relations, said the committee in a report.

It cannot therefore by used by MPs to guide their decision-making when Mrs May’s deal finally comes to a vote.

Committee chair Nicky Morgan asked Chancellor Philip Hammond in the summer for “a full and frank assessment of the consequences of implementing the Withdrawal Agreement and future relationship with the EU” before MPs took part in their “meaningful vote” on Mrs May’s deal.

She said: “The Committee is disappointed that the Government has modelled its White Paper, which represents the most optimistic reading of the Political Declaration, rather than a more realistic scenario.

“The Committee is also disappointed that the Treasury has not analysed the backstop and fails to include short-term analysis of any of the scenarios, including impacts on public finances and on regional and sectoral job losses or gains.”

The Government document, released on November 28, modelled a range of possible outcomes from Brexit and found that all of them would be worse for the economy than staying in the EU.

Under the White Paper scenario, it suggested that the damage to the economy could be as little as 0.1% of GDP after 15 years, while the harmful impact of a no-deal Brexit could go as high as 10.7%.

But the committee found that the White Paper option modelled by civil servants “does not represent the central or most likely outcome” and therefore “cannot be used to inform Parliament’s meaningful vote on the Withdrawal Agreement”.

The cross-party panel suggested MPs should instead draw from the full range of scenarios presented in the paper when deciding how to vote, some of which are markedly more pessimistic.

They said the Government should have given an analysis of the backstop arrangement – under which the whole of the UK would remain in a customs union with the EU for an unspecified time after the end of the transition period.