OFFICIAL forecasts of a major hit to the economy from leaving the EU are flawed, a report says today.
It challenges a leaked Whitehall analysis that predicts Brexit will mean much lower growth.
Instead the 20-page study from the Economists for Free Trade group says UK output could be 4 per cent higher after 15 years. The report argues that the official forecasts are little different to the pre-referendum Treasury predictions dubbed Project Fear.
The latest figures come ahead of a Cabinet meeting tomorrow to decide Britain’s negotiating position on post-Brexit trade. Eleven senior ministers will convene at Chequers – the prime minister’s country residence – to try to reach an agreement.
The report will provide ammunition for pro-Leave Cabinet ministers such as Boris Johnson and Michael Gove, who favour greater divergence from Brussels rules.
The new report, ‘Alternative Brexit Economic Analysis’, was written by four leading independent economists: Roger Bootle, the founder and chairman of Capital Economics; Gerard Lyons, former economic adviser to Boris Johnson; Julian Jessop of the Institute for Economic Affairs; and Professor Patrick Minford of Cardiff University.
Whitehall forecasts leaked last month suggested that growth could be between 2 and 8 per cent lower over 15 years after leaving the EU. The North-East and West Midlands were predicted to be the worst-hit.
However, today’s report says the forecasts – still yet to be officially published – ignore the potential benefits of free trade.
‘The latest Whitehall analysis can only be properly assessed and subjected to rigorous outside scrutiny if it is published,’ it said.
‘The failure to do so – together with the close similarity of its results to previous discredited Treasury analyses – has fuelled suspicion about the objectivity of the work.
‘The report shows that if the Government’s Brexit policy is fed into the new Whitehall model and unreasonable assumptions are corrected, the long-term economic impact of Brexit is positive. We find that the level of GDP could be between 2 per cent and 4 per cent higher in 15 years than if the UK had remained in the EU, rather than up to 8 per cent lower.’
Endorsing the report, former Tory leader and Brexiteer Iain Duncan Smith said: ‘This new study by some of our most respected economists, who have been right in the past on key issues such as the euro and the immediate effects of Brexit, deserves to be taken very seriously.
‘It suggests we should all be highly sceptical of Project Fear Mark 2 – the Treasury-led operation by Whitehall officials to discredit Brexit.
‘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.’