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Mon, 13 July 2020

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MPs savage Philip Hammond's claim Brexit deal will deliver 'double dividend' for the economy

MPs savage Philip Hammond's claim Brexit deal will deliver 'double dividend' for the economy
2 min read

Philip Hammond's claim that backing Theresa May's Brexit deal will boost the British economy is not credible, a powerful committee of MPs has said.


The Chancellor has previously talked up a "a double-deal dividend" if MPs swing behind the withdrawal agreement thrashed out between Theresa May and the European Union.

He told the Tory party conference last year that agreeing a pact with the  EU would see the economy receive a "boost from the end of uncertainty, and a boost from releasing some of the fiscal headroom that I am holding in reserve at the moment".

But a new report by the cross-party Treasury Committee rubbishes those claims, pointing out that the independent Office for Budget Responsibility has branded talk of a pay-off for the economy "odd" because "what is being talked about is avoiding something really very bad".

The report said: "As the OBR already assumes an orderly Brexit in its forecast, no ‘deal dividend’ over and above the existing forecast could be attained simply by avoiding a disorderly, or no-deal, outcome.

"Beyond this, there could be some improvement to business confidence and investment following an orderly transition or a resolution of Brexit-related uncertainty that is not currently forecast by the OBR. It is not credible that this be described as a dividend."

Treasury committee chair Nicky Morgan said there would not be a boost to the economy "just by avoiding no-deal", adding: "Business confidence may improve with increased certainty, but it’s not credible to describe this as a dividend."

The report comes just a day after Mr Hammond blamed "uncertainty" over Brexit for slowing economic growth.

The Chancellor pointed to the latest figures from the Office for National Statistics which showed the economy growing by a lower-than-expected 0.2% in final three months of 2018 - down from 0.6% in the previous quarter.

The services sector meanwhile shrank by 0.2% in the last month of the year, with manufacturing taking a 0.7% hit and the construction sector shrinking by 0.3% month-to-month.

Elsewhere in its report, the Treasury Committee took aim at the Chancellor's claim that the Government is bringing down the curtain on years of public spending cuts.

"Claims by the Chancellor that austerity is coming to an end are expansive and imprecise," he said.

'He should set out what he means in more measurable terms, especially as he will face more difficult choices at future budgets for how to fund such a pledge."

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