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Why the Treasury’s Brexit forecasts will be almost irrelevant

26 November 2018

8:08 PM

26 November 2018

8:08 PM

The publication by the Treasury of its forecasts of the economic impact of Theresa May’s Brexit deal, versus no-deal and staying in the EU, has been keenly awaited.

But it turns out that what we will read, probably on Wednesday, will be almost irrelevant.

Because what the Treasury has modelled is not the deal actually struck on Sunday by Theresa May, but her Chequers plan.

And, as you will be keenly aware, the rest of the EU has rejected her Chequers combination of the UK staying in the single market for goods and the dual-tariff customs territory the Facilitated Customs Arrangement.


In other words, we will be asked by the Treasury to compare two scenarios that the PM herself admits could yet happen – ie no Brexit and no-deal Brexit – with one scenario, Chequers, that cannot possibly happen.

In fairness to the Treasury, it was impossible for it to model the deal that was actually done at the weekend because in respect of the UK’s future trading relationship with the EU, Theresa May’s Brexit is myopic to the point of being semi-blind.

The Political Declaration on the outline of the Future Relationship with the EU, signed by May and the other EU 27 leaders, allows for a range of future trading options, from an almost conventional Free Trade Agreement close to Canada’s to something that is nearly but not quite as ambitious as Chequers.

So if you want to actually know the economic cost of the deal Theresa May will attempt to sell to MPs on 12 December start with what the Treasury projects as the economic cost of Chequers compared with staying in the EU, and then knock off a bit more income.

Robert Peston is ITV’s Political Editor. This article originally appeared on his Facebook page.

 


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