The Brexit dividend will fund the extra money going to the NHS, according to top economists.
The boost to the nation’s finances will cover the extra funding for the NHS promised by the Prime Minister – plus there will be £5 billion left to pay for tax cuts.
Professor Patrick Minford, Chair of the Economists for Free Trade (EFT), said:
“The Prime Minister has committed to raising the NHS budget by £20 billion per year.
“This is entirely in line with our projections of what is available from the Brexit Dividend.
“The IFS is completely wrong in its calculations – it does not require extra taxation. Indeed it leaves £5 billion a year to be used for tax cuts if so desired.”
EFT forecast that because of Brexit, the UK economy will see a significant boost. This is because of the long-run gains such as a fall in prices because of the scrapping of the EU tariff wall on goods from the rest of the world, improved export performance, an end to the annual EU subscription of £10 billion net and less red tape for business. The effect of all this is to push growth up to nearly 3 per cent per annum by the mid-2020s.
Over the next decade, EFT estimate the gains from Brexit to be 7 per cent of GDP over the next decade, with a direct gain to HMRC of 10 per cent of their revenue.
The EFT Budget For Brexit showed how this would lead to responsibly spending an extra £25 billion a year by 2020 and a further extra £40 billion by 2025. This would mean that by 2025 there would be an extra £65 billion.
This boost would allow the Government to reduce public debt to a safe 60 per cent of GDP by the mid-2020s.
EFT estimated that public borrowing for 2017/18 financial year would come in at around £40 billion, against much gloomier estimates from the OBR. In the Spring, EFT came up with the same projections, and on the basis of the downward trend in public borrowing, these remain on track.