Rees-Mogg eats own words with fantasy trillion pound claim

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.

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.