City A.M.: Economists “debunk” Whitehall Brexit analysis – and claim the economy will grow

A group of pro-Brexit economists claim to have “comprehensively debunked” Whitehall analysis suggesting the UK is heading for a period of depressed growth after leaving the EU, arguing the government’s stated policy will actually lead to growth.

The Economists for Free Trade believe Brexit on the basis of Theresa May’s Lancaster House speech will boost the UK’s economy by two-to-four per cent.

The group has sent its findings to Theresa May, foreign secretary Boris Johnson, environment secretary Michael Gove, Brexit secretary David Davis, international trade secretary Liam Fox, defence secretary Gavin Williamson, ahead of Thursday’s Brexit war Cabinet at Chequers.

It is hoped the government will emerge from this meeting with a formal position in place, having so far failed to secure an agreement despite the looming European Council, where transition must be secured in order to avoid major firms triggering their contingency plans.

The study, described as the Alternative Brexit Economic Analysis (ABEA), has been based on a standard trade model known as GTAP, which the four authors – Patrick Minford, Gerard Lyons, Roger Bootle and Julian Jessop – believe is now the basis for Whitehall workings.

Unlike the official forecasts, which revealed some regions may face double-digit declines after Brexit, this analysis is based on the government’s stated outcome of a Canada-plus free trade deal with the EU, sitting alongside free trade with the rest of the world.

The 20-page report states: “The latest Whitehall analysis makes many assumptions that are simply not credible. Strangely, it does not even model the new agreement with the EU that the government is seeking… If the government’s Brexit policy (as declared at Lancaster House) is fed into the new Whitehall model and unreasonable assumptions, as mentioned above, are corrected, the long-term economic impact of Brexit is positive.”

Former Conservative Party leader and pro-Leaver Iain Duncan Smith said the work “deserves to be taken very seriously”.

He added: “It suggests that we should all be highly sceptical of Project Fear mark two – the Treasury-led operation by Whitehall officials to discredit Brexit and browbeat ministers into the softest of departures from the EU.

“It shows that far from depressing UK economic growth in the years to come, escaping from the EU will boost domestic economic growth and raise living standards right across the country, particularly for the poorest.”

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