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Leaving the EU: No Deal

Volume 648: debated on Tuesday 6 November 2018

4. What assessment he has made of the potential effect on the OBR’s Budget 2018 forecasts of the UK leaving the EU without a deal. (907470)

The Office for Budget Responsibility has set out its forecasting assumptions regarding EU exit and will update them when the details of a deal justify a forecast change. Parliament will be presented with the appropriate analysis to make an informed decision ahead of the vote on the final deal. It is in the interests of the EU and the UK to strike a deal, and we remain confident that we are on track to achieve a mutually advantageous deal in the near future.

The Chancellor’s Budget measures were based on OBR assumptions of an orderly withdrawal from the EU and a 21-month continuation in the customs union. In the event of a no deal, will the Minister share with the House the assessment he has made of the potential decline in tax revenues and consequential changes to his tax and spending plans in the Budget?

The Government are fully committed to achieving a good deal with the EU. We will make lots of assessments during that process, but our mind is focused on achieving that deal and the Government will achieve it.

Mr Speaker, through you, may I assure all Members of this House that the Treasury Committee will take very seriously the job of scrutinising the analysis produced by the Treasury on the final deal on behalf of all Members, and will let Members know the conclusions that we draw from that before the meaningful vote?

My hon. Friend the Minister may well be aware of the OBR discussion paper published last month on Brexit and the OBR’s forecasts. Paragraph 1.27, which talks about the risk of a disorderly Brexit, says that

“while not a direct parallel, it is worth noting that the ‘Three-Day Week’ introduced in early 1974…was associated with a fall in output of…under 3 per cent that quarter.”

The shadow Chancellor might think that the 1970s was a good way to manage the economy, but can my hon. Friend assure us that he does not think that that is the way forward for this country?

That is certainly not the way forward. I can assure my right hon. Friend that we are doing everything we can to plan for all eventualities. That is why I am taking through a large number of statutory instruments to take account of all possibilities next year, but we are working on, and focused on, achieving a good deal.

There is no estimate in the Red Book for the benefits to tax revenues of the measures that we took in the Sanctions and Anti-Money Laundering Act 2018. Is that because Ministers are holding that money in their back pocket in case of a no deal?

What is clear is that we will have greater freedom in terms of how we implement a sanctions and anti-money laundering regime, and that will give us the opportunity to fix measures that are appropriate for this country, and the revenues will flow from that.

Surely the greatest threat to this country is not no deal, but a Labour Government and the tax bombshell that would come with them.

I agree wholeheartedly with that characterisation of the risks associated with the Opposition ever getting into power. The enormous increases in taxes for businesses would hit consumers and be appalling for the state of the economy.