The UK Chancellor of the Exchequer, Philip Hammond, caused utter consternation amongst the Tory Brexit faithful when he expressed his hope that the UK and the EU would remain close: “Instead of doing what we’re normally doing in the trade negotiations – taking two divergent economies with low levels of trade and trying to bring them closer together to enhance that trade, we are taking two completely interconnected and aligned economies with high levels of trade between them, and selectively moving them, hopefully very modestly, apart,” Hammond said. Whilst his remarks were disowned by the PM, she went on to express her confidence in him. The position he is taking will be welcomed by those wanting a “soft Brexit”, so there is a broad support base within the ruling Tory party for this position.
For his part, the Governor of the Bank of England, Mark Carney, has suggested that a “deeper relationship” with the EU will benefit the UK economy, post-Brexit.
Much has been made by Leave supporters of the fact that the UK economy has not “fallen off a cliff” since Brexit – which might explain the lust in certain quarters for a “cliff edge” Brexit where it severs all EU toes and falls back on WTO rules, perhaps. No doubt, some of the dire projections made in some quarters of the Remain camp were a tad too rabid, but the fact remains that the UK is still an EU member state and is yet to experience life out in the cold.
Mark Carney, in his much more measured way, has pointed out that the UK economy is indeed experiencing Brexit head winds in that it is not enjoying the same share of global growth that other economies have seen. Speaking at the World Economic Forum at Davos, Switzerland, Carney said: “The economy is doing not as well as we expected it to prior to the referendum.” He estimated that the UK economy would have enjoyed a further 1% of growth had it not opted for Brexit. “What it works out to is tens of billions of pounds lower economic activity Investment has picked up a bit, but it hasn’t picked up anyways to the same extent as internationally.”
Carney predicted that as clarity emerged over the eventual shape of Brexit that the UK economy would re-couple with the global economy, but he noted: “Investment in advanced economies is growing at double-digit rates, and it is low single digits here. The deeper the relationship with Europe, the deeper the relationship with the rest of the world… the better it’s going to be over time for the UK economy”.
It is hard to disagree with what Carney said.
The leaked impact statements on three probable Brexit scenarios suggest that the hit to the economy over 15 years will be between -2 and -8% of GDP. The leaked report will be made available to the Commons Brexit Committee shortly, but it has already led to a call for a re-think from a junior minister, Dr Philip Lee: ‘If these figures turn out to be anywhere near right, there would be a serious question over whether a government could legitimately lead a country along a path that the evidence and rational consideration indicate would be damaging. We can’t just dismiss this and move on. If there is evidence to the contrary, we need to see and consider that too.’
For the record, Dr Lee supported the Remain position.