Brexit dividend ‘unlikely’ says chief forecaster

THE PROSPECT of an economic “Brexit dividend” if Britain reaches a withdrawal deal with the EU has been described as “unlikely” by the chief of the Government’s independent economic forecasting body.

In Monday’s Budget, Chancellor Philip Hammond said that a Brexit agreement would deliver a boost, as businesses and households were freed from uncertainty and the Treasury was able to spend some of the £15.4bn buffer it is holding in reserve to cope with a possible no-deal outcome.

But the chairman of the Office for Budget Responsibility (OBR), Robert Chote, told MPs on the House of Commons Treasury Committee that a deal was “unlikely” to deliver a huge improvement to the public finances.

And when asked whether the OBR had encouraged the Chancellor to use the term “deal dividend”, he replied: “No, that’s not us.”

“We could be in a world where that removal of the immediate concern about something very nasty could release some pentup investment that people have been hanging back on and you could have a result in terms of asset and equity prices rising,” said Mr Chote.

“But it’s not clear to me that that plausibly delivers you a huge fiscal upside.

“Stronger business investment doesn’t help the public finances in the near term. Because of capital allowances, it actually weakens them. But you get stronger growth in the long term.”

BREXIT SECRETARY Dominic Raab has indicated that he expects a deal on Britain’s EU withdrawal to be finalised in the next three weeks.

Downing Street has so far said only that it is working to conclude a deal “as soon as possible”, and hopes to do so during the autumn. But Mr Raab told a crossparty committee of MPs that the end of negotiations, which have stretched on for 19 months, was now “firmly in sight”.

It came as news emerged that demand for Irish passports at the country’s embassy in the UK has surged as the clock ticks down to Brexit.

The October summit of the European Council – long-billed as the “moment of truth” for Brexit negotiations – passed without a deal, and leaders of the remaining 27 EU countries decided not to schedule a special summit in November unless chief negotiator Michel Barnier told them there had been “decisive” progress in talks.

But Mr Raab appeared to suggest that he expected a deal within the next three weeks, as he set a date for himself and negotiator Olly Robbins to appear before the House of Commons Exiting the EU Committee.

“I would be happy to give evidence to the committee when a deal is finished and currently expect November 21 to be suitable,” wrote Mr Raab.

The letter, released by the committee yesterday, was dated October 24 and therefore does not reflect any breakthrough in the past few days. Negotiations are deadlocked on the question of a “backstop” arrangement to guarantee that there will be no hard border in Ireland.

Prime Minister Theresa May insists she will not accept an EU proposal which would establish a customs border between Northern Ireland and the British mainland, while Brussels is resisting her plan to keep the whole UK temporarily in a customs union.

Mr Raab wrote: “Despite our differences, we are not far from an agreement on this issue. We agree on the principle of a UKwide customs backstop. An agreement on the details of that backstop should be possible.

“Both sides agree that this backstop cannot provide for a permanent UK/EU relationship and are committed to a future relationship that works for the whole of the UK, including Northern Ireland.

“We are open to talking about ways to achieve this and committed to continuing discussions in order to reach an agreement.

“The end is now firmly in sight and, while obstacles remain, it cannot be beyond us to navigate them. We have resolved most of the issues and we are building up together what the future relationship should look like and making real progress.”

Separately, former Chancellor George Osborne has admitted mistakes by the Government during his time in office “opened up the door” in the EU referendum.

Appearing on BBC’s Newsnight,

he admitted the Conservative Party “did get things wrong” in the lead-up to the Brexit vote. Remain supporters had been “too late in the day” in explaining the benefits of EU membership, he said, while not enough had been made of the value of immigration.

He told the programme: “I think we were wrong to play into the debate that everything that Brussels did was a challenge and a battle and was wrong.”

A Department for Exiting the European Union (DExEU) spokesperson said: “There is no set date for the negotiations to conclude. The 21st November was the date offered by the Chair of the Select Committee for the Secretary of State to give evidence.”

Despite our differences, we are not far from an agreement. Brexit Secretary Dominic Raab