Rees-Mogg eats own words with fantasy trillion pound claim

by Sam Ashworth-Hayes | 11.09.2018

Jacob Rees-Mogg has put his name to an “Economists for Free Trade” (EfT) report claiming a no-deal Brexit would bring a £1.1 trillion boost to the British economy over the next 15 years. This is pure fantasy. The overwhelming consensus amongst economists is that quitting the EU with no deal would be a disaster on a truly magnificent scale. EfT have reached the opposite conclusion with a magical analysis – a “unicorns plus plus plus” model.

The core assumption is that Britain will strike a “World Trade Deal” under World Trade Organisation (WTO) rules. What this actually means is that Britain will crash out under WTO rules, and then unilaterally remove all tariffs on all imports – something EfT chairman Patrick Minford said in 2016 would “mostly eliminate manufacturing”. So no protection for British steel from Chinese dumping, no protection for British agriculture from subsidised American farms. Just the raw logic of the market.

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No government would go through with such a plan. It is an absurd assumption to include in something purporting to be a serious analysis. EfT implicitly acknowledges this, making the case that if the EU “insisted on slapping WTO tariffs on British exports and Britain responded in kind”, we would see a “staggering £13 billion a year boost to UK revenues”.

Except, of course, we wouldn’t; the government’s own analysis shows that any such Brexit would blow a gigantic hole in the public finances. Any revenue gain from tariffs would be dwarfed by the economic hit. It’s economics 101: tariffs reduce trade, which makes us worse off, and we – domestic consumers – pay them. An odd thing for a supposed free trade lobbyist to forget.

Perhaps the strangest part of the whole report is the fulsome praise of the WTO. Its boss recently pointed out that the UK would have to renegotiate its position within the organisation, and that it was “very unlikely” this could be achieved “between now and March”. Quitting the EU without a deal would not be the “end of the world… but it’s not going to be a walk in the park either”. And it certainly wouldn’t be a trillion pound windfall.

What’s more, Donald Trump – that pin-up for so many Brexiters – is busy trashing the WTO. So if we followed the hardliners’ advice, we’d be launching ourselves into a dog-eats-dog world where rules matter less than brute power.

That Rees-Mogg has fallen for such a poor analysis is confusing. In the past, he has shown a commendable scepticism about economic predictions, claiming that “to think you have any idea where the economy will be in 15 years is erroneous”. And yet here he is backing a forecast over exactly that horizon! Perhaps his previous objections were less to do with economic modelling and more to do with distaste for the results.

Edited by Hugo Dixon

15 Responses to “Rees-Mogg eats own words with fantasy trillion pound claim”

  • Not so long ago this dinosaur of a ‘politician’ was telling us that it would take 50 years for the nation to get any benefit from leaving the EU. As we are learning, he is a fantasist and it beggars belief that he is getting all this media attention.

  • He’s clearly been reading his father’s books on how to make profits from economic meltdowns. Take a look at ‘Blood in the Streets: Investment Profits in a World Gone Mad’ by William Rees Mogg to understand why he doesn’t give a monkey about whether the UK fails.

    He is a charlatan and a danger to this country. It’s time his constituents knew what kind of person he really is and voted him out.

  • Rees-Mogg is too frightened of the likely response to publish his Project Fantasy plan. He objects to May’s Chequers Plan but has no plan of his own. He objects to the way the negotiations proceed but never takes part in any. His performance in the various committees is embarrassing because of his demonstration of NO understanding of the issues of Ireland, job security (even suggesting that the standards of India could be applied in the UK). He is essentially the hard-right’s version of Corbyn… another professional objector, neither of whom should be let out alone.

  • Mogg has substantial holding and investments in Russia – mainly banks affiliated to the Kremlin. He has invested not one penny in post-Brexit Britain. This individual clearly is manipulating (or attempting to) Brexit for his own ends. And the fact that foreigners don’t do business in Russia without the Kremlin’s blessing is food for thought indeed. One wonders what sort of a deal has been arranged between Moggs representatives and the Russian authorities ? Or am I just paranoid.

  • Has the Minister for the 19th Century read the report on today’s speech by the Head of Land Rover/Jaguar. It is interesting that Rees-Mogg and the Eft know more about the car industry than the people who run it on a day to day basis.

  • No ,you are not paranoid JM. From the start of this debacle I’ve thought that it’s all about money, mega, mega money. The talk of “trillions” would have these vultures wetting themselves, (to be cleaned up by Nanny no doubt!) It’s a massive con on the gullible of the UK. The thought of having to pay tax when the EU proposed a bill to scrutinize the tax affairs of off shore accounts put the fear of God into those who had most to lose.Corruption is a way of life to the rich and nothing must get in the way of the standard of living they think is an entitlement they and their kind should have, and the EU is not going to stop that.

  • If we continue to listen and be enthralled to these charlatans we will get nothing more than we richly deserve. This peculiar, blithering Rees-Mogg twit is not even a proper self-made charlatan, he looks to only hold that title by inheritance as well. If this is the calibre of leader we’ve got, we can forget about “Global Britain.”

    Can you see this twit negotiating with a roomful of hard-nosed Yanks who won’t be impressed with eccentric 50-odd-year-old schoolboys? Thought not. Even Nigel’s used car dealer charm will wear off in a week or two. Stop Brexit or consign Britain to poverty.

  • The sad thing really isn’t so much that there are lying brexiteers. More than sufficient proof of that by now. The really sad thing is that there are a lot of people who, despite common sense telling otherwise, are willing to believe this abject nonsense. And sorry, that is where to me the comparisons with 1930’s Germany become chillingly real.

  • The whole Brexit “gamble”, and that’s as much gloss as you can put on it, comes down to hoping that the UK will make new trade deals which compensate for the inevitable losses due to Brexit. It relies on Liam Fox flying around the world and somehow negotiating better trade deals than we already have. We are often told by Brexiteers that a we have great new opportunities, a golden era, finding new markets, such as in China.
    There is absolutely nothing, no EU regulation, preventing us doing business with China, now, today. Germany exports more than 4 times than the UK to China, as members of the EU. What is going to be so great about Fox and his team’s trade deal that doesn’t already exist? Our market is a fraction the size of the EU’s. It’s rather like turning up as a corner shop trying to undercut a major supermarket concern.

    And in the meantime, we stick up barriers to our geographically closest and largest export market. This just underlines that Brexit has got nothing to do with sound economic or business sense, but is ideologically motivated. Pity that the politicians who sold it to the voters didn’t tell them.

  • There is so much to agree with in the previous comments. I have always thought that these chalatans , Farage, Johnson, Gove et al were in it for their own greedy selfish interests and as a consequence do not have an iota of interest in what happens to the U.K. in the event of the U.K. crashing out of the E.U. If I had the power which I haven’t I would put all these miscreants on a boat for North Korea just to give them a taste of what they are attempting to turn the U.K. into.

  • You make an enormous mistake in your analysis: under no circumstances will the UK exchequer be “better off” if tariffs are imposed – consumers (i.e. Brits in this case) will pay the additional tax. Yes, this means that the UK Exchequer technically will have more money, but it will come out of the pockets of British consumers NOT from the exporting company (we would be taxing ourselves). This is what Trump is doing to the US and it is about to push up inflation and hit Americans in their pockets – it is designed to dissuade people from buying imported goods to buy domestic goods instead: unfortunately the UK can’t meet these needs domestically. So please be clear on tariffs and who does the paying!!