Ross Clark Ross Clark

Philip Hammond has exposed the problem with the Treasury’s Brexit forecast

It is the decimal point which really gets me. If we have a ‘no deal’ Brexit, according to Treasury forecasters, the economy will be 7.6 per cent lower in 15 years’ time than it would be if we didn’t leave the EU. What, not 7.7 per cent? It is an age-old trick: express your guesswork with a decimal point or two on the end and hope that it sounds a bit more convincing, as if a bit more science has gone into it.

But sorry, the Treasury should not be fooling anyone this time. It is politically interesting that Philip Hammond told the Today programme this morning that he thinks Theresa May’s deal will leave the UK worse-off than if we stayed in the EU – it confirms that the Chancellor’s heart is not really in Brexit at all, and undermines further May’s efforts to sell her lousy deal to MPs. But other than that I cannot think of any justification for reporting this morning’s Treasury forecasts. They have no credibility whatsoever, not given the Treasury’s record. In May 2016, you might just remember, these same officials told us that a vote to the leave the EU would, within two years (i.e. by June 2018), shrink the economy by between 3.6 per cent and 6 per cent relative to how it would have grown had we voted to stay in the EU. Given that the economy has been stumbling along at annual growth of between 1.5 per cent and 2 per cent for most of the time since the 2008/09 crisis, the forecast implied a recession. Yet instead the economy is now 3.2 per cent larger than it was at the time of the referendum. Moreover, the same Treasury paper forecast that a vote for Brexit would raise unemployment by between 500,000 and 800,000.

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