The last time the Treasury made a major public statement on Brexit was immediately prior to the EU referendum, and at the apogee of the of the Project Fear campaign, an intervention which, even at the time, was risible and has since proved to be way off the mark.
Contrary to the predictions at the time, employment is at a record high and the rate of unemployment in the UK is half that in even equivalent economies like France, not to mention the horrendous unemployment levels in “Club Med” countries of which the EU should be ashamed.
Inward investment is flowing into Britain undaunted by Brexit, in fact because of it, building goes apace, export manufacturing order books are bulging and the city continues to enjoy its pre-eminent position.
The one prediction the Treasury’s gravity model got right was that Sterling would enjoy a new competitive rate, something which many countries around the world are trying to achieve by stealth but which we have been handed on a plate. The net effect of this is that there will be a rebalancing of the economy towards manufacturing and the regions, while temporarily consumer spending will fall, something which George Osborne’s stated ambition, in his “march of the makers”, failed to achieve during his entire tenure as Chancellor. Perhaps people in the regions were not so stupid to vote for Brexit after all!
Is it embarrassment at the abject failure of the Treasury’s ability to forecast that has produced a deafening silence? There has undoubtedly been a black hole since the referendum during which no light has emerged from the Treasury when it comes to the post-Brexit economy – perhaps it is because of the Treasury’s “gravity model” sucking in all the light, in the way of black holes!
What is remarkable is that given we are in the throws of the most significant shift in the UK economy in a generation, a period of unprecedented and exciting, creative disruption, the Treasury have made no comment on the future model for the post Brexit Economy, no plan to make Britain more prosperous than it otherwise would have been by staying in the EU. They haven’t even commented on the projected shape of economic growth. Why is this?
While other departments like Dexeu, DIT, Foreign Office and Defra make plans, statements, and negotiate to produce a good outcome for Britain, the department accountable for the economy – the Treasury – say nothing.
Where is the plan for Britain’s post-Brexit economy?
This is even more surprising since the Chancellor, Philip Hammond, was a mild Eurosceptic prior to the referendum and would be expected to be contributing to Britain’s post Brexit success. Where is the model for a post-Brexit economy?
Perhaps the Chancellor has been indoctrinated by the Treasury Mandarins. Perhaps he will fix all this in the autumn budget statement.
There is no doubt that those in the enterprise part of the economy, business people who are entrepreneurs and owners have lost patience with the Treasury and their captive Chancellor.
Whatever the reasons, we need results, not least for the sake of business confidence and certainty and we need it soon, deal or no deal.
As a starting point I would recommend the Chancellor adopt the “New Model Economy” report published recently by a broad alliance of business groups and economists and declare this as government policy as soon as possible.
Chancellor, over to you.
September 14th, 2017: Telegraph