Downing Street slaps down Philip Hammond over claim no-deal Brexit would cost the UK £90bn

Posted On: 
17th July 2019

Downing Street has hit back at Philip Hammond over his claim that a no-deal Brexit would cost the UK £90bn.

Downing Street has slapped down Mr Hammond's £90bn assessment

A spokesman for Theresa May said the Chancellor was “making a particular argument of his own” as part of the Tory leadership race.

It followed Brexit Secretary Stephen Barclay accusing Mr Hammond of quoting “selectively” from Treasury figures to bolster his arguments against a no-deal Brexit.

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Mrs May’s spokesman said: “The Chancellor has on a number of occasions pointed to some research from last year which was modelling Chequers-type agreements against a no-deal scenario. 

“They were published by the Government, but they are a specific comparison between the Chequers-type model of a future partnership, not a comment on no-deal in general.”

He added: “The Chancellor has obviously, over a number of weeks now, been making a particular argument of his own in relation to the Conservative Party’s leadership contest.”

Mr Hammond quoted the figure after Conservative leadership rivals Jeremy Hunt and Boris Johnson laid out a series of spending pledges in their bid to become the next PM.

Both candidates have also admitted they are willing to take Britain out of the EU, with or without a deal, on the 31 October deadline.

Speaking critically of their plans to spend the £25bn “headroom” stored up by the Treasury, the Chancellor said: “I have no doubt whatsoever that in a no-deal exit we will need all of that money and more to respond to the immediate impacts of the disruption of a no-deal exit.

“And that will mean that there is no money available for longer-term either tax cuts or spending increases.

“But let me go further. The Government's analysis suggests that in a disruptive no-deal exit there will be a hit to the exchequer of about £90bn.

“That will also have to be factored in to future spending and tax decisions.”

Brexit Secretary Stephen Barclay, giving evidence to the Exiting the European Union Committee, told MPs that Mr Hammond’s calculations were "selectively picked out" of Treasury reports.

He said: “Firstly that’s a prediction for 2035, and I’m sure the Chancellor himself would say that it is very difficult for any finance ministry with certainty to predict 15 years after the implementation period.

“Secondly that figure assumes no government intervention…”

He added: “As a former treasury minister all assessments from the Treasury are collectively signed off as a government assessment.

“But I am also, so that one doesn’t selectively pick out from those reports, putting them in context and it is in reference to 2035, and it is in reference to no intervention from government in event of no deal.”

A source close to the Chancellor however hit out at the pile-on, claiming the £90bn was from a cross-government analysis.

They said: "Colleagues in Government must have short term memories as the £90bn is from the cross government economic analysis published by DEXEU.

"Economists across government fed into it – indeed Stephen Barclay presented it to the House of Commons. No10 and other departments signed it off so officially it’s the ‘government’s view’ not just the Chancellor’s.

"They had every opportunity to take out if they disputed it so much…"


Meanwhile, Mr Hammond branded the views of Mr Johnson ally Jacob Rees Mogg, as "terrifying" as the Tory backbencher argued that no-deal Brexit could boost the economy by £80bn.

The Brexiteer referred to Mr Hammond’s “negative” no-deal forecast as “pure silliness” in an column for the Daily Telegraph.

But Mr Hammond fired back on Twitter: “Happy to debate scale of negative impact of No Deal on the economy - but terrifying that someone this close to a potential future government can think we’d actually be better off by adding barriers to access to our largest market.”