We all saw the Big Red Bus with the Scary Number on the side being used by the Vote Leave campaign in the run-up to the referendum on Britain’s EU membership. “We send the EU £350 million a week” it told. The inference was clear: we leave the EU, and we then have £350 million a week extra money to spend on the things that our own Government decides. Thus we would Vote Leave, and Take Control.
Yet all the time, no-one in the Leave camp troubled themselves with any kind of cost-benefit analysis, any idea of what we got for our money. Worse, the actual figure was not £350 million, but just under £250 million, with the net contribution after the UK’s rebate coming out at less than £200 million a week. Now, we have been given an idea of what that cost-benefit analysis might look like.
Someone being economical with the actualité here
Of all media sources, it was the Murdoch Times that brought us the bad news this morning, telling its readers “Hard Brexit could cost £66bn a year”. The analysis is stark: “The leaked section of a Cabinet Paper … is believed to be part of one of three prepared for discussions this week and covers the World Trade Organisation, trade deals, and immigration. It says ‘The Treasury estimates that UK GDP would be [between] 5.4 per cent and 9.5 per cent lower after 15 years if we left the EU with no successor arrangement, with a central estimate of 7.5 per cent”. And there was more.
“In headline terms, a) trade would be about a fifth lower than it otherwise would have been; b) foreign direct investment would also be around a fifth lower and c) the level of productivity would be driven down by the reductions in trade and investment causing an overall reduction in the economy’s efficiency in the long run”. Ouch!
And it gets worse: “The net impact on public sector receipts [ie taxes] - assuming no contributions to the EU and current receipts from the EU are replicated in full - would be a loss of between £38 billion and £66 billion a year after 15 years, driven by the smaller size of the economy”. What a brilliant way to curb immigration, eh?
Taking a middle course through those numbers gives us around £50 billion a year. That’s almost a billion quid a week - to save less than £200 million. The thought that this is a classic case of cutting off nose to spite face comes to mind. But as the Guardian has told, “Brexit backers who have seen the documents told the newspaper the figures were unrealistic and claimed there was a push to ‘make leaving the single market look bad’”.
La la la, Dave can't hear you
That is because leaving the Single Market will be bad. We already have a currency crash, with hikes in fuel prices and those of other imported goods on the way before the end of the year. A smaller economy will support fewer jobs. A weak currency, for a country heavily dependent on imported goods, means higher prices, and that will feed through into inflation. Slowly but surely, the simplistic world view of the Brexiteers is falling apart.
But the Government’s Brexit man David Davis is still prepared to stand before the Commons and say “There will be no downside to Brexit, only a considerable upside”.
So that’s all right, then.