The Chancellor, Philip Hammond, has delivered his Spring Statement today. Little detail about provisions for Brexit were mentioned, but this report on the state of the British economy has been accompanied by the usual prophecies of doom and gloom after Brexit. Remoaners continue to promote myths of higher prices and lower growth, ignoring the significant economic benefits which will arise from Brexit.
By Leaving the EU Customs Union, the British Government will regain control of our tariffs and trade policy. We will no longer be forced to impose tariffs on imports from non-EU countries.
The EU’s tariffs are particularly high on food, clothing and footwear – as much as 50% on certain foods and up to 20% on clothing. These essential goods form a disproportionately high share of the expenditure of ordinary working people. Abolishing or reducing tariffs on certain goods will cut prices in our high streets and could save the average family hundreds of pounds a year.
Being outside the Common Agricultural Policy will enable our farming system to better serve British interests and demand for food, rather than being dictated to by the suits in Brussels. Being outside the Common Fisheries Policy will mean our fishing waters and quotas are controlled by Britain, giving us a greater selection, and the fishermen more income.
During the EU Referendum campaign, the former Chancellor, George Osborne, predicted doom and gloom and an immediate year-long recession after a vote to Leave for starters. We all now know this was utterly incorrect. The British economy grew at a healthy 1.7% last year, as Hammond confirmed today. Employment is at an all-time high and the budget deficit is falling faster than predicted.
However, the Office for Budget Responsibility’s forecasts for growth in the coming years are more pessimistic than many analysts expected. Growth in 2019 and 2020 is projected to be 1.3%. This is surprisingly low when we consider recent healthy growth of around 2% and the unexpected boost to productivity growth last year. These forecasts reflect the pessimism about Brexit which is prevalent in the Civil Service.
In fact, a clean Brexit would provide more opportunities to increase our economic growth. Outside the Customs Union we can pursue free trade deals with countries around the world. Already, countries including the United States, Canada, Australia and New Zealand have expressed enthusiasm about trade agreements with the UK. It is vital the Government ends the uncertainty about our ability to negotiate these deals during the Transition Period. These deals will provide new trading destinations and opportunities for British exporters and will boost our overall economy. A Standard Chartered report released today suggests increased trade with emerging markets could boost our economy by £12 billion per year (1).
As was discussed extensively during the EU Referendum campaign, a key benefit of Brexit will be saving the huge sums of money which Britain sends the EU every year. The Government will have billions of pounds of additional money to spend on our own priorities, such as the NHS, defence or tax cuts.
Today’s figures point to a likely Divorce Bill of £37.1bn, to be paid over several years. This is made up of the usual payments into the EU budget during the 2-year Implementation Period and various financial commitments and obligations. If EU negotiators do not relax their stubborn approach to the negotiations and a Brexit deal is not agreed soon, Britain will fully Leave the EU on March 29th 2019 and we will not need to pay this huge Divorce Bill. Our negotiators must remember this.
In his Spring Statement, Hammond was right to confirm the Government is spending on preparations for Brexit, with or without a deal. The departmental allocations for the £1.5 billion of funding for the 2018/19 fiscal year were announced today. This includes over £300 million for the Department for the Environment, Food and Rural Affairs for preparation involving agriculture, and almost £400 million for the Home Office, covering borders and immigration.
Overall, we should be optimistic about the prospects for the British economy and the finances of average consumers after Brexit. Once we Get Britain Out of the EU, we can decide for ourselves what to do with our economy. This includes cutting tariffs on essential goods, creating new exporting destinations and spending more money on our NHS – all for the benefit of Great Britain after Brexit.
Peter Lyon is a Research Executive at cross-party Eurosceptic campaign Get Britain Out