NO DEAL BREXIT ‘TO COST UK £30 BILLION’
YOU CAN FORGET ANY TAX CUTS, WOULD-BE PMs TOLD IN STARK WARNING FROM OBR
A NO-DEAL Brexit would derail the economy and blow a £30 billion hole in Britain’s public finances, a report by the independent budget watchdog warned today. In a hard-headed assessment, the Office for Budget Responsibility said crashing out could lead to a two per cent fall in real GDP by the end of 2020 and a sharp fall in the pound that would increase many prices in the shops.
The report came out hours before MPs were voting on a move to stop the next prime minister crashing Britain out of the EU without a deal — amid rising predictions that the Government faces a significant defeat at the hands of MPs.
Chancellor Philip Hammond said the OBR report showed “a very significant hit to the UK economy” unless Britain leaves with a deal to protect trade and jobs. The OBR report warned that the loss to the exchequer would gobble up all the headroom for tax cuts promised by Tory leadership rivals Boris Johnson and Jeremy Hunt and
raise the threat of extra borrowing or tax rises instead.
MPs were planning a major rebellion this afternoon on an amendment designed to prevent Mr Johnson — widely seen to be heading for No 10 next week after the conclusion of the Tory leadership race — from suspending Parliament in October so he can deliberately crash out without the consent of the Commons.
The amendment cited an Act of Parliament from 1797 to bind the new prime minister’s hands and ensure that the House can sit and have its say.
Cabinet minister David Gauke this morning hinted that he might vote for the amendment, despite the expectation of a three-line whip forcing the hands of Tory MPs to vote against it.
The amendment was being tabled by MPs from four parties, including Labour grandee Hilary Benn and former Tory ministers Alistair Burt and Justine Greening.
Fo r me r e d u c a t i o n s e c re t a r y Ms Greening tweeted: “Time for all MPs to show some common sense and keep Parliament open as normal in September and October. Today’s the day to stop prorogation.”
Sir Oliver Letwin, the former Cabinet minister taking part in the rebellion, said: “This amendment, if passed, will prevent Parliament being put into abeyance during October. That is obviously a very important development.”
Senior MPs believed several ministers were prepared to risk being sacked by “rebelling or absenting themselves from the Commons”.
Mr Gauke, pictured, said it would be “outrageous” to suspend Parliament to thwart efforts to block a no deal on October 31. “Parliament has always in recent years sat at that t i me o f ye a r,” h e told BBC Radio 4’s Today programme. “And at a crucial point in this country’s history if ... Parliament should not be able to sit, should not be able to express its opinion and its will, I think would be outrageous.”
Conservative whips were described by MPs as “very jumpy” ahead of this afternoon’s voting.
OBR chief Robert Chote shot down Mr Johnson’s claim that a well-managed no deal would be “vanishingly inexpensive”.
Asked whether the cost would be that small, Mr Chote said: “You are looking here at something that could increase borrowing by £30 billion a year so most people would say that’s a significant sum of money.”
The OBR “stress test” for the public finances was based on the less severe of two scenarios painted in a report by the IMF, meaning the actual consequences of a no deal could be much worse.
It warned of a situation in which “heightened uncertainty and declining confidence deter investment, while higher trade barriers with the EU weigh on exports”. The report said: “Together, these push the economy into recession, with asset prices and the pound falling sharply. Real GDP falls by two per cent by the end of 2020 and is four per cent below our March forecast by that point.”