The Express: The Treasury is about to terrify us with Project Fear 2

The Treasury has form on these awful forecasts. They said that in the year and half after the referendum the economy would contract by between 0.1 percent and 2.1 percent. In fact it grew by 2.8 percent. Now we have a second Project Fear.

Apparently our economy will be badly hit under Brexit, whether we leave (worst case) with No (Trade) Deal on WTO rules or with a Canada Plus Trade Deal.

All this plus warnings of serious ‘disruption’ and ‘possible recession’.

Even Theresa May’s proposed Deal does not escape: this will reduce GDP “in 15 years’ time by 1.4 percent”.

But as Mrs May has joined us in pointing out, these forecasts are no better than the assumptions the Treasury have put into them.

Those assumptions are incredible in the extreme.

First, they assume free trade deals around the world will yield only tiny gains to our economy.

Yet current EU protection is so high that on the Treasury’s very own model eliminating it in trade deals for better access to other countries would give a gain of 4 percent of GDP.

Second, they assume that large costs will arise at the EU border for UK-EU trade even if we negotiate “free trade” with the EU.

One is pure “border costs”; such as extra paperwork and lengthy inspections. However, computerisation means that almost all cargoes are now cleared before reaching port; and this is now mandated by WTO rules.

Another new border cost according to the Treasury would be costly EU claims that our exporters do not satisfy required product standards.

However, under WTO rules this is illegal since existing product standards are already exactly obeyed.

Put in sensible assumptions into the Treasury’s own model in place of this nonsense and out pop big gains from a proper Brexit.

The last fear factor invoked by the Treasury is the “disruption” and “recession” from “crashing out with no deal”.

But in practice No Deal would incorporate by administrative cooperation all existing agreements that are quite uncontroversial- on electricity in Northern Ireland, on aviation and so on.

When the current deal is voted down in our Parliament, as it surely will be, the government will need to move rapidly so that when we leave, these practical cooperative actions are in place.

And if it can negotiate Canada Plus, so much the better.

To read the piece in full, click here.

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