Why Would Anyone Believe the Treasury’s Brexit Predictions Ever Again?

The new Treasury-led Brexit forecasts have to be read in the context of their record at predicting what would happen in the immediate aftermath of a Leave vote.

The HMT prediction for GDP 3 months after the referendum was that “the UK economy would fall into recession” and contract up to -1%. It grew +0.5% in this period.

The Treasury told us: “The analysis shows that immediately following a vote to leave the EU, the economy would be pushed into a recession, with four quarters of negative growth.” The reality has been positive growth every single quarter since.

HMT forecast that in the two years following a Leave vote GDP would fall between -3% and -6%. GDP grew by 1.9% in 2016 and 1.8% in 2017, with better than expected growth in the final quarter. There is now no recession forecast. 

On unemployment, they infamously said it would rise by between 500,000 and 820,000 in the immediate aftermath of the referendum. Unemployment fell again last week to a four-decade low.

And the Treasury said government borrowing would rise by up to £39 billion immediately after the vote. Instead borrowing for the financial year to date is down 12% on the same period last year. That’s the lowest year-to-date total since 2007.

Why would anyone believe the people who predicted this nonsense ever again?

Treasury and Cabinet Office Mandarins Behind Brexit Doom Document

The word in Whitehall this morning is that the leaked document forecasting doom-laden outcomes in every Brexit scenario was put together by civil servants from the Treasury and the Cabinet Office Brexit unit. Fingers are being pointed at the Brexit team based in the Cabinet Office, run by the Remainer Olly Robbins, with suggestions work was led by Treasury mandarins. Buzzfeed reported that the document was prepared by officials across Whitehall for DexEU, though Guido is led to believe David Davis thinks the forecasts are rubbish, as he has repeatedly said of the Treasury’s economic predictions before. Remainers had been hyping up these assessments, trying to get pro-Remain journalists to warn of a coming bombshell, so it would make sense for someone to flush the document out online.

In any case, Guido wonders who is going to take it seriously. The civil service’s negative post-Brexit worst case scenario is that GDP will be 8% lower in 15 years – roughly 0.5% a year worse. These people were some 3% out with their predictions last year. If they can’t predict one year ahead, do they really have any idea about 15 years’ time?

UPDATE: Also worth noting that none of the models forecast – Norway, Canada or no deal – are currently being sought by the government.

Adonis: Brexit Like Spanish Inquisition and Japan Capturing Singapore

Two more to add to Andrew Adonis’ greatest hits of bonkers Brexit comments. Over the weekend he compared leaving the EU to the Spanish Inquisition and, while accusing the BBC of being pro-Brexit, the fall of Singapore to Japan:

A friend should have had a word a long time ago.

Nadine: Hammond Has to Go

Pretty clear what the Mogg thinks too:

A view shared by increasing numbers of their colleagues…

Villiers: Brexit Being Diluted
Brexit Minister: We’re Not Backsliding

Theresa Villiers expresses the concerns of Brexiteers that Number 10 is shifting away from a clean Brexit towards permanent alignment with the EU:

But Brexit minister Martin Callanan insists the UK will have the freedom to diverge in future:

If we don’t, what is the point of Brexit?

Most Tory Leavers Mostly Relaxed About Transition, But…

The Moggs and Bones of the Tory Brexiteer wing have never supported the idea of a transition period, and they are getting a lot of attention again today. Guido gets the impression that most Tory Brexiteers, and certainly those in the Cabinet, are still on board with a transition so long as it is time-limited to two years. Most have agreed to compromise and accepted that not much will change in those first two years after Brexit day. Their view is that there is no point spending political capital negotiating over the transition and that our cards would be better played making sure we get a good trade deal. That seems sensible, what matters is the end state is a proper Brexit allowing us to diverge from the EU in future.

There is however one aspect of the transition that does worry Leavers up and down the party. They have been concerned to learn of some of the new EU rules Britain could be forced to accept during the transition – there are as many as 20 new directives and diktats that Leavers want us to be able to reject. David Davis says it will take the EU at least two years to get their new laws through so we shouldn’t worry. That isn’t reassuring MPs, as the UK cannot be an obstacle to the swift passage of new legislation after March 2019. Having to take new rules during the transition would not look like we are transitioning out of the EU…

UPDATE: DD’s words of reassurance for Brexiters:

“we will have to agree a way of resolving concerns if laws are deemed to run contrary to our interests and we have not had our say…

… and we will agree an appropriate process for this temporary period.

So that we have the means to remedy any issues, through dialogue, as soon as possible.”

Q4 Growth Better Than Expected #DespiteBrexit

The economy grew at the fastest rate of the year in Q4…

Tale of Two Interventions

Tuesday: Boris Johnson calls for more NHS spending, Downing Street organise for him to take a punishment beating at Cabinet and then publicly rebuke him to the Lobby.

Thursday: Philip Hammond calls for a sell-out on Brexit, Downing Street decline to comment.

Concerning…

Hammond Demands High Alignment and Free Movement

Speaking in Davos Philip Hammond has called for a Brexit which brings only “very modest” changes, sees continued close alignment with EU rules and regulations, and the continued free movement of people. Hammond praised the ultra-Remain CBI, before arguing that he didn’t want to see any serious material change in our relationship with the EU:

“We are taking two completely interconnected and aligned economies with high levels of trade and selectively moving them, hopefully very modestly apart…”

And on free movement:

“We want to maintain the closest possible relationship in people to people exchanges”

The Chancellor also mocked May:

“I’m told a walk in the mountain air was what encouraged the PM to call the general election last year so I’m hoping she stays indoors this time”

And Boris:

“As we came into Davos, there was an avalanche warning yet the foreign secretary isn’t even here.”

If the change to our relationship with the EU is only “very modest”, if we continue with high alignment with EU regulations and the “closest possible” outcome on free movement, what is the point of Brexit? How is that delivering on the referendum result? Number 10 slapped down Boris for going public with policy demands that haven’t been agreed by Cabinet this week. Will they slap down Hammond too?

UPDATE: The backlash begins. A Whitehall source tells Guido:

“Hammond is the most tin eared politician in the U.K. He has no following in the Conservative Party and bears the imprint of the last City special interest who sat on him.”

UPDATE II: A second Whitehall source says:

“People voted to take back control yet Hammond clearly wants to keep control in Brussels. His high alignment plan pushed by ultra Remainers would be a disaster – making us a submissive rule taker. This unsanctioned intervention should slapped be down hard.”

UPDATE III: And a third Whitehall source:

“Hammond should stop listening to the CBI and other EU flunkies and start listening to the 17.4million people who voted to leave the EU. If he doesn’t then he may as well hand the keys to the Treasury to McDonnell now.”

Trump: Trade Will Increase Many Times Over, Tremendous Increases

Front of the queue…

Miriam: Dave “Still Doesn’t Get It”

After Dave’s Davos admission yesterday Mrs Clegg crows on Insta:

“In addition to the serious negative economic consequences for young people in the country, the already obvious loss of international influence by the UK is a disaster, not just a mistake. Really hard to understand how come he still does not get it…”

Think it’s Miriam who still doesn’t get it…

Dave on Hot Mic: Brexit Has Turned Out Less Badly Than We Thought

Project Fear was wrong, admits Dave…

Former DIT Perm Sec Now Writing For Pro-EU Spin Shop

The public pronouncements of former top civil servants liberated from office tell you all you need to know about how Whitehall is stuffed full of ultra-Remainers opposing Brexit. Sir Martin Donnelly was Permanent Secretary for the Department of International Trade until last year. He has just written an article for InFacts, the mad pro-EU spin shop. InFacts‘ own website makes clear on its homepage that it wants to ‘Stop Brexit’. Does Donnelly agree with this? A very odd forum for a mandarin in charge of a department directly involved in delivering Brexit. 

In his article Donnelly paints a very pessimistic picture of what would happen if the UK leaves the single market – i.e. Brexit. He has form on this, in November he said we should join the EEA. Donnelly then talks about the problems that would arise “if” the UK leaves the customs union. Eh? This man was in charge of the Department for International Trade. The whole point of his department is to sign trade deals outside the customs union. Did he not believe the UK would be leaving the customs union when he was perm sec? How did he ever get the job?

Mogg v Davis: Highlights

The standout moments from DD’s appearance in front of the Brexit select committee were his sparring with new ERG chairman Jacob Rees-Mogg. The Mogg said once again that we will be a vassal state of the EU during the transition, one of his favourite lines:

And he accused the government of being “weak“:

In truth it has long been inevitable that not much will change during the transition. What has always mattered is that the transition is short and that the end point that comes afterwards is a real, clean Brexit, properly diverging from the EU…

Clips via BrexitCentral.

Sterling Back Above $1.40

Sterling climbed back above the $1.40 benchmark today in a sign the currency is strengthening after Brexit. The pound is one of the strongest performing currencies so far in 2018. The pound touched $1.20 this time last year but has since recovered. Thomas Flury at UBS told the Financial Times

“It looks like the pound is becoming increasingly resilient . . . Markets have probably become more confident that a cliff-edge Brexit in 2019 will be avoided.”

Next time a remainer brings up the value of the pound…

Did Heywood Have Permission to Defend Remain Ally Robbins?

Worth watching Nick Watt’s profile of Theresa May’s Brexit supremo Olly Robbins, which draws on Guido’s story about his communist past and reveals David Davis regularly mocks his former Soviet sympathies. The film also carried a rare public statement from Cabinet Secretary Jeremy Heywood defending his Remain ally:

“The civil service is putting enormous effort and many of its very best people into making a success of the project. It is being tested on a daily basis and I am very proud of what we have – so far – delivered. Morale is at record-levels, proving once again that the civil service is at is very best when under pressure.”

The civil service code is clear: mandarins must “ensure you have ministerial authorisation for any contact with the media”. Which means May or Lidington will have had to authorise this statement, or else Heywood has broken the ministerial code. Did they? Or do they just let him do what he wants…

Ultra-Remainers Claiming End State Victory

Wishful thinking from the Treasury’s ultra-Remain former Perm Sec? Or is he onto something?

We have seen briefings before from the Treasury that May is going to end up closer to Hammond’s vision of the end state than Boris’ and Gove’s, so it’s worth taking this with a pinch of salt. But the Remainers’ optimism explains the increasing concerns of Cabinet Brexiters that we are not going to pursue a Brexit that makes the most of leaving…

Macron: French “Probably” Would Have Voted to Leave EU

French President Emmanuel Macron admits the French people would “probably” have voted to leave the European Union had they been allowed a referendum. #DespiteFrexit…

Priti Accuses Electoral Commission of Bias and “Double Standards”

Following the Electoral Commission’s refusal to investigate the Remain campaign despite clear evidence of spending breaches, Priti Patel has accused them of bias and “double standards”. Priti notes that the Commission launched a full investigation into Vote Leave over claims of spending collusion – despite no evidence – and yet are refusing to look at BSE even though a whole dossier of evidence was submitted to them. Priti has a point – how can they investigate the Leavers when there is no evidence, but ignore evidence of Remainers overspending?

What is particularly concerning is that you decided on 20 November 2017 to reopen an investigation into Vote Leave Limited and Mr Darren Grimes, in spite of the fact that there is much less evidence of a common plan. As you acknowledge at [25] of the Review of Assessments – ‘there are no direct indications of the campaigners working together’ (my emphasis added) and that – as you state at [31] – that ‘the Commission is not aware of what any such communications [between Vote Leave and Mr Grimes] contained or whether it indicated a common plan or arrangement was in place’.

In other words – despite the fact that there is no evidence of Vote Leave Limited or Mr Grimes engaging in joint planning (even of an advisory nature) – you have been persuaded of the need for a full investigation. However, when clear documented evidence of the Remain campaigns coordinating specific messaging is presented to you, this is dismissed as ‘advisory’. This would appear to be a clear case of double standards.

Priti not unreasonably alleges the Electoral Commission have a lower bar for investigating Leavers than Remainers:

I have to conclude that the Electoral Commission appears to have used an extraordinarily low bar – arguably, far too low a bar— when deciding to open your new investigation on Vote Leave and other campaigners for Brexit, yet have set a very high bar when deciding to open an investigation into Britain Stronger in Europe.

She wants them to reconsider their decision. Good luck with that – we know where the Electoral Commission’s loyalties really lie

Now Rachel Reeves Baffled by Labour’s Brexit Position

Now Rachel Reeves completely caught on the hop trying to describe Labour’s ever-uncertain position on the single market and Brexit in general. […] Read the rest

+ READ MORE +



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