Brexit secretary contradicts government forecast of economic hit from no-deal EU exit, setting up clash with Hammond

'I'm always chary of any forecast because most of them have been proved to be wrong'

Rob Merrick
Deputy Political Editor
Sunday 26 August 2018 13:07
What does a no-deal Brexit mean?

Dominic Raab has dismissed his own government’s forecast of huge economic damage from crashing out of the EU without a deal, insisting most such predictions “prove to be wrong”.

The Brexit secretary set up a clash with Philip Hammond, the Chancellor, by rejecting his warning of a 7.7 per cent hit to GDP and an £80bn black hole in the public finances.

The projection is the Treasury’s own analysis of the impact of a no-deal Brexit over the next 15 years – because of the loss of market access to the EU and chaos at Britain’s borders.

But, asked about the stark warning, Mr Raab said: “I'm always chary of any forecast because most of them have been proved to be wrong.”

Speaking to The Sunday Times, he added: “We need to treat some of the forecasts with a measure of caution”, before claiming that estimates of economic growth next year “have been revised up”.

In fact, the Bank of England has cut its GDP forecast for 2019 to 1.7 per cent – well below the pre-referendum growth rate – and warned “the economic outlook for the UK remains clouded by Brexit uncertainties”.

In the interview, Mr Raab also brushed off polling evidence of growing public unease about the prospects for Brexit, as the negotiations remain deadlocked.

“The majority of people think Britain will be better off long term for leaving the EU. People think, just get on and deliver it. That's what we're going to do,” he insisted.

Last week, Mr Hammond triggered renewed Tory infighting – and Brexiteer calls for him to be sacked – when he confirmed the Treasury’s fears about a no-deal exit.

In a letter to the Treasury committee, he said the analysis showed “GDP would be 7.7 per cent lower (range 5.0 per cent to 10.3 per cent) relative to a status quo baseline”.

And he added: “GDP impacts of this magnitude, were they to arise, would have large fiscal consequences.”

Nicky Morgan, the committee’s Tory chairwoman, leapt on the conclusions, saying: "The chancellor has confirmed that the government forecasts a disastrous hit to our economy and living standards in the event of a no-deal Brexit.”

But the intervention came just hours after Mr Raab attempted to reassure the public over a disorderly exit, even citing “opportunities” that could arise.

In the interview, Mr Raab hinted at warm relations with Michel Barnier, the EU’s Brexit negotiator. After meeting again this week, he will have spent more time with him than the seven hours David Davis, his predecessor, did this year.

“I think he's a steely interlocutor; he knows what he's seeking to achieve,” the Brexit secretary said.

“Equally, behind closed doors he's very warm. We talk about family. I do think getting to know the other side on a personal level helps. You have to understand what the other side is thinking, what the pressures on them are.

“He's a very personable guy – he's invited me and my wife, Erika, down to his farm. Once we've got this out of the way, I might even take him up on it.”

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