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Guardian: Chancellor is an ‘economic illiterate’, claims pro-Brexit economist

Date: 16 02 2017

Chancellor is an ‘economic illiterate’, claims pro-Brexit economist

Free trade group lobbying against UK import tariffs slams Philip Hammond Brexit strategy as road to ‘self-harm’

The chancellor, Philip Hammond, has been described as “economically illiterate” by the head of a group of economists lobbying for the UK to ditch tariffs and embrace free trade after Brexit.

Patrick Minford, an economics professor at Cardiff University, said Hammond and other politicians risked setting the UK on a course of serious self harm if they pushed for a trade deal with the EU that put customs charges on goods and services imported to the country.

Minford was speaking as his previous group, Economists for Brexit, relaunched on Thursday itself as Economists for Free Trade. He argued that if the UK removed all import tariffs, even if the EU did not reciprocate, GDP would rise, government receipts would be boosted and retail prices paid by British consumers would fall.

Hammond and others have warned that such unilateral free trade models could harm some exporting industries and cost jobs.

Asked how he would shift the present chancellor’s view, Minford replied: “Well this is just economic illiteracy. I don’t know how one deals with an economic illiterate other than say ‘come to my lectures’ or something.”

It is not the first time Minford has taken aim at a UK chancellor. Campaigning for Brexit ahead of last year’s referendum, the economist turned on George Osborne, who had insisted that those campaigning to leave the EU were economically illiterate. “Osborne is the one who is economically illiterate here,” Minford said at the time.

A source close to Hammond said: “To suggest that two successive chancellors don’t know what they are doing but if they had listened to Mr Minford the world would be at rights, is preposterous. Mr Minford does not appear to understand the challenges that the UK economy will have to navigate as it exits the EU, nor the full potential of the opportunities that await.”

Minford’s panel comprises 15 economists and has an advisory group that includes the MP Jacob Rees-Mogg, as well as John Longworth, co-chair of Leave Means Leave and former head of the British Chambers of Commerce who resigned from that post over his support for Brexit.

One of the panel’s reasons for wanting to drop tariffs on imports to the UK is the potential benefit to consumers from lower prices. They say that currently the EU customs union raises prices through protection and business regulation, to the benefit of producers and at the expense of consumers.

Roger Bootle, another member of Economists for Free Trade, said it was a “battle” to get the idea of zero import tariffs across to people. But he highlighted Theresa May’s recent assertion that the UK would leave the Europe’s single market when it left the union.

“Think of where we have come from already. I don’t know how long in the run-up to the Brexit referendum I would keep hearing how vital it was to stay in the single market … we have come an awful long way from there … So I wouldn’t give up on Philip Hammond, I think we can convince him,” said Bootle.

In her speech on Brexit, in January, the prime minister said that instead of membership of the single market Britain would seek “the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement”.

Setting out free-trade supporters’ views ahead of those negotiations, Minford said there was a risk the UK would end up in a “tit-for-tat” battle with an un-cooperative EU if it maintained tariffs. “Any strategy that involves the UK putting up tariffs against the EU will cause significant self harm, which is entirely avoidable.”

February 16th, 2017: Guardian