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Brexit: UK Has Everything To Loose — Chancellor Philip Hammond


Theresa May faced uproar over Brexit today after the Government’s own analysis showed her deal would slow down the economy.

Over 15 years, growth could be held back by up to 3.9 per cent, the analysis concluded. New trade deals with the rest of the world would be almost worthless, adding just 0.1 to 0.2 per cent to national output.

Independent experts estimated the worst case would equate to a reduction of about £100 billion a year by the 2030s — a sum far exceeding the UK’s current annual contribution to EU budgets. The government paper did not spell out the cost in cash terms, however.

In the Commons, the Prime Minister insisted her withdrawal agreement was shown to be the best available in the document.

“The analysis shows the deal we have negotiated is the best deal for jobs and the economy which delivers on the result of the referendum,” she said.

But Labour leader Jeremy Corbyn said her figures were “meaningless” because Mrs May had not secured a binding trade deal so far. “This is the most shambolic Government in memory,” he said.

“She is asking parliament to vote on a 26-page wish list.” He warned: “It is now clear Parliament won’t back this plan.”

Mrs May, replying to Mr Corbyn, claimed: “Last night, the shadow chancellor [John McDonnell] told an audience in London that he wanted to seize upon a second referendum and vote Remain.

“So, now we have it — they want to cause chaos, frustrate Brexit, overturn the will of the British people, and that would be a betrayal of the many by the few.”

Chancellor Philip Hammond confirmed that “in pure economic terms” the UK will lose out under every possible form of Brexit. “The economy will be slightly smaller in the Prime Minister’s preferred version of the future partnership,” he said.

In a series of interviews, the Chancellor said “other ideas” could emerge if the Government loses the showdown vote on the deal on December 11, a possible hint that an option such as European Economic Area membership — dubbed a Norway-style deal — could gain traction.

His words clashed with Mrs May’s repeated claim that her proposals are the only Brexit available apart from a chaotic no deal.

Backlash as government refuses to publish full legal advice on Brexit

Today’s 83-page Whitehall report found:

Mrs May’s original Chequers proposals asking for “frictionless trade” would deliver a blow to the UK’s GDP of between 0.6 per cent  and 2.5 per cent over 15 years, depending on the level of immigration after Brexit.

A deal without frictionless trade, which would be closer to the outline deal on the table, would mean a blow of between 2.1 per cent and 3.9 cent.

Crashing out with no deal would be far worse, a blow of between 7.7 per cent and 9.3 per cent. The worst-case scenario could occur if net EU immigration was reduced to zero, the paper said.

A Canada-style free trade agreement, which many Brexiteers prefer, would mean a hit of between 4.9 per cent and 6.7 per cent.

Norway-style membership of the EEA, seen as the softest Brexit because it retains free movement, could mean a blow to the economy of just 1.4 per cent.

The analysis found London would suffer the worst impact of any region under a May-style deal, given the size of the financial sector.

But London would be least harmed under no deal, which would clobber manufacturers in the North East, North West, Northern Ireland and West Midlands.

Mrs May had a boost this afternoon when aircraft maker Airbus said it would unlock investment to the UK if her deal was passed.

And the Confederation of British Industry said her deal “fits the bill in reducing short-term uncertainty”.

Analysis: Just 13 days to go – PM’s tour of UK could turn out to be her swansong

“It’s all going to plan — Barnier’s plan,” said a Brexiteer MP with the gallows humour infecting Westminster. But the question asked by backbenchers and ministers alike is: With two weeks before a life-or-death vote on the withdrawal deal, where on earth is Theresa May’s masterplan?

She seems to have excluded much of the Cabinet from her thinking. Some ministers say privately they do not know if she has a Plan B while others, such as five Remain-backing ministers, are soliciting support for Efta or a Norway-style EEA membership. Two, Business Secretary Greg Clark and Justice Secretary David Gauke, were spotted having a discreet breakfast with Jo Johnson, the pro-EU brother of Boris.

Senior Tories are baffled by Mrs May’s decision to tour Wales, Scotland and Northern Ireland to sell her deal “over the heads of MPs” to the public. “It’s a sideshow,” said one rebel. “The only electorate that matters is the 650 MPs here.” They are also surprised by how “incredibly relaxed” the party whips appear. The tactics from the 1993 Maastricht rebellions, when tales were rife of backbenchers pinned to the walls by a burly whip nicknamed The Terminator, have gone. One MP tells of Brexiteers being invited for a “chat” at No 10 only to find a Remainer there too.

At the same time, Labour MPs say an attempt by Mrs May’s chief of staff Gavin Barwell to woo them fell flat because he focused on the backstop, an issue of more concern to Jacob Rees-Mogg’s group. Even ministers struggle to see how the whips could pull off a victory with the parliamentary maths so stacked against them. Many are instead pondering how bad the defeat would have to be to make a second attempted vote become impossible. Coming 25 votes short, for example, would be seen as a reversible defeat. But losing by 70 or more would look permanent.

But through the fog and false starts, a plan is emerging. From December 4, campaigning will step up a gear, with ministers pushing key messages each day in Commons debates. Some may be deployed to talk round  specific groups, like Michael Gove (who will come out fighting on the Marr show this weekend) meeting sensible Brexiteers. If a few rebels can be turned, the Brexiteers might start feeling the heat.

No 10 has decided to accept the Commons’ demand that amendments can be put down on other options, including a second referendum and an Efta-type Brexit, before the main vote. Downing Street has a simple message: Only one deal on the table guarantees Brexit and minimises economic damage.

The key vote seems to have been brought forward from December 12 to 11, creating a spare day which they think might be used to stage a confidence vote, with the fate of the entire Government riding on it. By this stage, market turmoil could persuade MPs to back the deal in a second vote for the sake of stability. As a last resort, Mrs May might even name her retirement date, allowing a new PM to seek a new trade deal. With 13 days left until the vital vote, few would bet on victory for a PM whose UK tour may turn out to be her swansong.

The boost came as the Prime Minister was preparing to visit Scotland on the latest leg of her UK tour to drum up support for her proposal.

Asked if Mrs May would have to resign if she lost the showdown vote next month, the Chancellor did not deny it. He said: “I think the Prime Minister would want to sit down with the Cabinet and take stock.”

He suggested the Cabinet could push for different Brexit solutions. Mr Hammond continued: “She would clearly have to recognise what had happened in Parliament. We don’t know. We would have to look at what the vote in Parliament was, who voted which way, whether other ideas were emerging.”

The Chancellor’s comments were seized on by supporters of a second referendum.

Commenting on the Whitehall analysis, Labour MP Owen Smith said: “It is a truly extraordinary admission that Mrs May’s deal will cut tens of billions of pounds from our GDP.”

The group, which represents more than 250 firms in the UK, has voiced support for Mrs May’s Brexit proposals but concerns are growing that they will fail to get through Parliament.

But Brexit-backers scoffed at the evidence. Former Brexit minister Steve Baker said: “The reputation of government economics is in the gutter.”

City chiefs today issued a direct appeal to MPs to block a no deal outcome. Stephen Jones, chief executive of UK Finance, said: “Avoiding a no-deal cliff edge remains the absolute priority for the banking and finance industry.”

Huw Evans, director general of the Association of British Insurers, said: “It is absolutely critical this is avoided. Any future arrangement between the UK and EU must recognise that the that our world leading insurance sector can’t end up being rule takers.”

Catherine McGuinness, policy chairwoman at the City of London Corporation, added: “A no-deal Brexit would undermine financial stability by disrupting services provided by the City to households and businesses on both sides of the Channel. Securing a withdrawal agreement that delivers a transition period is vital,” according to Standard News.

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