At last, Osborne admits a Brexit plan is under way
TREASURY officials are making plans for how to deal with Britain quitting the EU, George Osborne admitted yesterday.
The Chancellor confirmed his Whitehall staff were doing “quite a serious amount of contingency planning” to deal with potential financial consequences of a Leave vote in the June 23 referendum.
His remarks were seen last night as recognition within the Government that chances of a vote to exit Europe appear to be growing.
Until he spoke out, Government ministers and officials had repeatedly insisted no planning was being done for a Brexit vote.
As recently as Tuesday, David Cameron’s spokesman said: “We are not doing any contingency planning for the referendum being a vote to leave.”
Mr Osborne was quizzed about post-referendum preparations during a session of the Commons Treasury Committee at Westminster yesterday.
He told MPs on the committee: “I think there would be very significant financial volatility around a vote to leave, and the Bank of England and the Treasury are doing quite a serious amount of contingency planning for the impact on financial stability in the aftermath of a vote to leave.
“I don’t think it’s appropriate to go into too much detail on that but we have made public various things like the fact we would have additional liquidity auctions.”
Mr Osborne said it would be up to the Bank of England’s Monetary Policy Committee to decide whether to pump more money into the economy to try to prevent a downturn in response to money market jitters after a Brexit.
The Chancellor said: “We are undertaking a lot of contingency planning for the immediate financial stability consequences if the country were to vote to leave.
“That would have a number of impacts on our financial system.
“It would be for the Monetary Policy Committee to make its decisions on both the bank rate and also things like quantitative easing.”
Mr Osborne also denied “fiddling the figures” in Treasury assessment of the consequences of Brexit in an attempt to scare the voters into voting to stay.
And he insisted the “overwhelming” view of leading economists was that Britain would be poorer outside the EU.
He faced a string of questions about the Treasury’s claim that household income would be £4,300 a year lower by 2030 if Britain quit the EU.
Tory backbencher Jacob Rees-Mogg said the calculations had left “the suspicion that the report has taken absolutely the best it can for remaining and the worst for leaving”.
He told Mr Osborne: “When you set up the Office for Budget Responsibility, you said ‘I am the first chancellor to remove the temptation to fiddle the figures by giving up control of economic and fiscal forecasts’.
“Have you taken back control so that you can fiddle the figures?”
Rejecting the claim, the Chancellor said: “It is the job of the finance minister of the country to communicate
to people the consequences of the decision they may undertake.
“That requires me to find language that people understand and therefore I think it is perfectly reasonable to set out, up front and centre and in the public remarks I made – that there was a range and explain what the central estimate was.”
He added: “I think it’s important in this debate to look at the weight of the evidence.
“Of course there is going to be claim and counter claim. But when it comes to the economic cost of leaving the EU versus the potential benefits you have to weigh up that. You have a small number of individuals, long associated with the campaign to leave the EU on one side of the argument and, on the other side of the argument, the vast bulk of economic opinion in this country, every major financial institution in this country, every international financial organisation and a host of external observers of the British economy.”