The dog that didn’t bark in yesterday’s statement from the Chancellor was the word Brexit. It didn’t get a mention yet it hangs over the economy like a dark cloud, at least according to the Office for Budget Responsibility; the Government’s own number crunchers.
I thought the figures sounded pretty good, a no deal Brexit will end up with the economy being 2% smaller than it would otherwise have been. Not too bad really, until I realised that was 2% on top of the 4% hit from Brexit with a Free Trade Agreement. So 6% in total if the talks which only have weeks to run end up without a deal.
To put that in context, 2% is about our annual average growth rate in the last ten years, or our entire annual defence budget or three times our foreign aid budget. 6% is three years growth, or three times what we spend on defence or a more than half what we spend on the NHS. That money will have to come from somewhere else, higher taxes or lower spending but will we notice?
Those losses don’t come as one hit but as slightly slower growth over many years. Will we still be blaming Brexit for slightly lower growth in, 1, 2 or 5 years time? I doubt it.
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