Philip Hammond holds the Budget red briefcase. Photo by Dan Kitwood/Getty Images
#Brexit bad news hidden in #Budget2017
Last week’s Budget speech by the Chancellor had very little to say about Brexit. But that doesn’t mean there isn’t a Brexit angle – you just have to look at what wasn’t there, rather than what was.
First, there was very little in the Budget to prepare for the challenges Brexit will pose to the British economy.
Second, the impacts of Brexit on migration and trade – and their impacts on the economy – were hidden in the Office of Budget Responsibility’s report.
And third (even the Sun spotted this), the cost to Whitehall of just negotiating Brexit was revealed to be £400m a year!
As my colleagues have written, the Budget really didn’t suggest a Government that’s getting the economy ready for the shock of Brexit. Is that because Brexit will be brilliant for the British economy? (We’ll come to that, but spoiler alert: the answer’s no.) There was some good news on training and technical education to address the extra skills the economy will need after Brexit, although the extra £500m a year promised by 2022 dwarfs just £40m extra on lifelong learning. But UK public infrastructure spending remains well below the OECD average when the challenge Brexit poses might lead you to conclude we should be well above that average; and wages are by 2022 likely to have stagnated for longer than at any time since the Napoleonic Wars, putting further strain on household budgets and personal debt.
So is that because the “remoaners” are wrong and the economy will be simply great after we leave the EU? Government announcements might indeed suggest that (hyping people’s expectations is seriously risky, but not perhaps more so than leaving the single market and the customs union anyway, so what the heck!) But, unfortunately for the “leaving’s lovely” brigade, the Government has to publish the Office for Budget Responsibility’s Economic and Fiscal Outlook (its analysis of the state of the economy over the period of the Budget forecasts) at the same time as the Budget, and that makes grimmer reading. As Open Britain point out, that report says that:
- leaving the EU will depress trade, which will threaten jobs, reduce wages and raise household costs;
- migration will be restricted by ending free movement – although nowhere near the government’s target of below 100,000 a year – putting strains on the skill and labour supply needed; and
- investment and growth will be held down by prolonged uncertainty, especially if we don’t do a transitional deal with the EU between 2019 and our complete departure from the EU.
Labour MP and Open Britain supporter Chris Leslie commented:
“The Government’s own forecasters predict they will miss their own targets on trade and immigration, and confirm trade will be lower, which would make us poorer. It’s not surprising that the Chancellor sought to airbrush Brexit out of his Budget.
“The Office for Budget Responsibility have poured cold water on the Government’s claim that they will strike a deal with the EU that delivers the exact same benefits as we enjoy now, by categorically stating that the trading regime will be less open than before.
“It also showed that the Government’s controversial migration target will be missed. The Government must now explain the rationale for keeping such an unrealistic target.”
Finally, the Sun spotted that the cost of negotiating our departure from the EU and negotiating trade deals with the rest of the world will cost £400m a year – including costs before any negotiations begin and exiting arrangements long after we are supposed to have left. That’s almost as much as the entire increase in the training budget!
The Budget did nothing to address the challenges of Brexit for working people – jobs, wages or living standards. I didn’t see Philip Hammond’s fingers crossed, but that’s about all his Brexit Budget strategy amounted to!