Brexit: MPs must get Bank of England advice on any economic damage before voting on deal, says Treasury Committee

Chancellor urged to set out impact on national income, income per head, labour productivity, household incomes, employment, exports, imports and the exchange rate

Rob Merrick
Deputy Political Editor
Tuesday 03 July 2018 00:08 BST
What could the sticking points be in the Brexit trade deal?

MPs must be given expert Bank of England advice on any likely economic damage from Brexit before they vote on the withdrawal deal, the Treasury Committee will say today.

Mark Carney is urged to draw up his own impact analysis, alongside the study promised by the chancellor before the Commons decides on Theresa May’s deal later in the year.

The Bank would set out the effect on the stability of the financial system – while the Financial Conduct Authority (FCA) has been asked to give its verdict on any threat to consumer protections.

“Parliament’s vote on the withdrawal agreement and future relationship can only be meaningful if it is properly informed,” said Nicky Morgan, the Treasury Committee’s chairwoman.

The call will anger pro-Brexit Tory MPs who have targeted Mr Carney, the Bank’s governor, for his gloomy conclusions about the economic hit to people’s incomes since the 2016 referendum.

The committee has also set out its “expectations” for the chancellor’s promised analysis, which would require Philip Hammond to produce an exhaustive list of statistics.

He should set out the impact of the Brexit deal on national income, income per head, labour productivity, household incomes, employment, exports, imports and the exchange rate – by sector and by region, it said.

A “distributional analysis” must also be produced to show the effect on households in each of 10 income bands.

Ms Morgan added: “In the months ahead, the committee will press for robust and high-quality analysis on the consequences of Brexit for the economy and the public finances, so that parliament’s decisions can be based on the best possible evidence.”

The letters have been sent in the wake of the furious row over the government’s leaked analysis, which showed every mooted Brexit outcome would make Britain poorer.

It predicted a no-deal Brexit, leaving Britain trading with Europe on World Trade Organisation terms, would reduce growth by 8 per cent over 15 years.

Leaving with a Canada-style free-trade agreement would see growth cut by 5 per cent, while even staying inside the single market would reduce growth by 2 per cent.

The document also warned that the gains from free trade deals with other big countries would fail to make up for the losses – a boost of just 0.2 per cent from a deal with the US, for example.

It was authorised by the prime minister, but described as “preliminary and partial” by ministers because it did not study the “bespoke” deal she says she is seeking.

In February, Ms May vowed she would not be deflected, whatever the forecasts of the economic price to be paid, saying: “The British people want us to leave the European Union and that is what we will be doing.”

Ms Morgan has asked the Treasury, the Bank of England and the FCA to all “publish their analyses in good time” for the vote – although the prospects of an autumn deal are receding.

If no agreement can be reached at all, the committee would “write again to set out its expectations”.

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