May’s mystery Brexit deal – that’s analysis voters need

by Luke Lythgoe | 30.01.2018

“Embarrassing.” That’s how one Brexit department source described the leaked government analysis of Brexit’s economic impact. The document, reported by BuzzFeed, shows Brexit would leave the UK worse off under every scenario modelled, in almost every sector and across every region.

The government has tried to play down the document, describing it as an “early draft” looking at “off-the-shelf arrangements” which the EU already has with other countries. It does not “set out or measure the details of our desired outcome – a new deep and special partnership with the EU”.

But that’s precisely the point. The civil service can’t do any analysis on the government’s policy, because the prime minister hasn’t spelled out what it is. Pronouncements about a “deep and special partnership” or a “bespoke” deal or David Davis’ “Canada+++” option are just vague guff.

It’s hardly a surprise that Theresa May hasn’t made her mind up, considering the psychodrama in the Tory party over the issue. But in the circumstances, all the civil servants can do is analyse the three options that are on the table.

  • No deal and we fall back on WTO terms: 8% lower growth over the next 15 years.
  • A comprehensive free trade deal with the EU: 5% lower growth.
  • Becoming an EEA member like Norway: 2% lower UK growth.

Brexiters, such as Iain Duncan Smith on the BBC’s Today programme, have pooh-poohed  the analysis, saying “every single forecast coming from government… has been completely wrong”.

But the study seems optimistic if anything. It looks only at the long-term damage, taking no account of any short-term hit as we adjust to life outside the EU’s customs union and single market. Given that the government’s policy is merely to postpone the cliff edge from next year until 2021, this could be big. The study also assesses the economic impact on Northern Ireland without factoring in the risk of a hard border.

Meanwhile, the analysis assumes we’ll get trade deals with the US, China, India, Australia, the Gulf countries, and the nations of Southeast Asia. Interestingly enough, for all the government’s blah about “Global Britain”, the study says a US pact would boost our economy by only 0.2% and all the other deals combined would add a mere 0.1% to 0.4% – underlining the folly of burning bridges with Europe in pursuit of a pot of gold elsewhere that doesn’t exist.

All sides are now calling for the government to publish the analysis, from the Labour opposition and Tory pro-Europeans to hardline Tory Brexiters like Bernard Jenkin. Even better would be to force May to set out the kind of Brexit she wants. At the moment, there’s a risk that parliament and the people will be duped into going along with Brexit without a clue about what they are letting themselves in for.

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    Edited by Hugo Dixon