Economic Effect of No Deal

Oral Answers to Questions — Treasury – in the House of Commons on 1st October 2019.

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Photo of Rushanara Ali Rushanara Ali Labour, Bethnal Green and Bow

What recent assessment he has made of the economic effect of the UK leaving the EU without an agreement.

Photo of Helen Hayes Helen Hayes Labour, Dulwich and West Norwood

What assessment he has made of the effect on the economy of the risk of the UK leaving the EU without an agreement.

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

We would prefer to leave with a deal, and we continue to work energetically and determinedly to get a better deal, but the Government are turbo charging their preparations to ensure we are ready to leave without a deal on 31 October. All necessary funds have been made available. The fundamentals of the British economy are strong: real wages are growing; employment is at a record high; and unemployment is at an historic low.

Photo of Rushanara Ali Rushanara Ali Labour, Bethnal Green and Bow

The Government’s Yellowhammer document, or base case scenario, states that there will be job losses, that food supplies will decrease and that financial services and law enforcement data and information sharing will be disrupted. Last night, we heard about customs clearance zones in Ireland and Northern Ireland, and the Brexit Secretary has admitted that there is insufficient time to complete the work. The Government spent £100 million on a PR campaign called “Get Ready for Brexit”. Is it not time that the Chancellor admitted that the Government are far from ready for Brexit and instead are heading for causing chaos in our country?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

The hon. Lady will appreciate that the uncertainty around Brexit has caused businesses significant concern. They want to see the Government deliver on Brexit and leave on 31 October, and that is what we will do. Significant preparations have been made for a no deal, including trade agreements reached, increases in personnel at Border Force and more than 600 statutory instruments laid in this Parliament. If she wants to help, she should support the Government in getting a deal.

Photo of Helen Hayes Helen Hayes Labour, Dulwich and West Norwood

There is evidence of a rise in short positions being taken out against the pound. Is the Chancellor confident that the hedge funds taking those short positions, some of which donated to the Prime Minister’s leadership campaign and the Conservative party, have no inside information about the planning or timing of a no-deal Brexit?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

That is such a ridiculous suggestion it does not deserve an answer.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

If we leave the EU without an agreement, do we get to keep the £39 billion?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

The figure of £39 billion is based on a deal. If we end up leaving with no deal, that £39 billion number is no longer relevant.

Photo of Charlie Elphicke Charlie Elphicke Independent, Dover

Is the Chancellor aware that the chief executive of the port of Dover has said that we are 100% ready to leave the EU, and will he help that readiness by bringing forward plans to dual the A2 to the port of Dover?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

I thank my hon. Friend for drawing the House’s attention to this issue. I am aware of that. I know, for example, that the investment the Government have made through Border Force, including the extra officers, is helping, and I am confident that in all circumstances we can keep trade flowing.

Photo of David Linden David Linden SNP Whip

We know that a no-deal Brexit would cost up to 100,000 jobs in Scotland and cost each family £2,300 a year. Is that really a price worth paying for the Prime Minister to break the law and go out with no deal?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

We do not know that at all. That is just scaremongering from the Scottish National party. We know that businesses throughout the UK, including in Scotland, want this uncertainty to end and want us to leave on 31 October.

Photo of John Stevenson John Stevenson Conservative, Carlisle

Does the Chancellor agree that if we were to leave with no deal, there could be a potential economic impact on our European partners and that therefore it is as much in the EU’s interests to reach a deal as it is in ours?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

My hon. Friend has made an important point: it is in everyone’s interests—ours and our European friends and partners—that we reach a deal. Intensive negotiations are going on, both with the Irish Government and with other European partners, and there is a very strong recognition that it is in all our interests that we reach a deal.

Photo of Edward Davey Edward Davey Liberal Democrat Spokesperson (Treasury), Liberal Democrat Spokesperson (Business, Energy and Industrial Strategy), Deputy Leader, Liberal Democrats

Is the Chancellor aware that the Office for Budget Responsibility’s alarming fiscal analysis of a no-deal Brexit assumes that the Government’s preparations are successful—and so result in a miraculously benign no-deal Brexit—and that even with this least-damaging no-deal Brexit the OBR predicts a hit to Britain’s finances that would destroy every single spending announcement by the Prime Minister and the Chancellor? Given that, is it not unacceptable for a Chancellor in a Government publicly contemplating a no-deal Brexit to fail to tell the truth to the British public that spending on health, schools and police will be slashed in the event of a no-deal Brexit?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

First, I do not recognise that picture at all. It has been made up by the Liberal Democrats. Secondly, the right hon. Gentleman talks about what is unacceptable. What is unacceptable is for the Liberal Democrats to pretend that the referendum on the European Union never happened.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader

We have heard in the media today that the UK Government will have proposals ready to send to the EU by the end of the Tory conference this week. The Prime Minister’s main negotiating strategy seems to be to convince the EU that we are willing to accept no deal, and hope that it will capitulate at the last minute. Can the Chancellor name one occasion on which the EU has folded at the last minute in international negotiations?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

Can the hon. Lady name a single negotiation in which we have not had the ability to walk away, out of the room?

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader

These are supposed to be questions to the Chancellor, not to me.

Businesses are not ready for a no-deal Brexit. They are already losing EU workers, and are closing down as a result. In a no-deal Brexit, they will be hit by tariffs, and many more of them will sink as a result of that. People will lose their jobs. Given that there is now less than a month until Brexit day, does the Chancellor really believe that there is time to negotiate a deal? If not, will he ensure that the Prime Minister respects the law and requests an extension?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

Significant work is going on to prepare the whole country for a potential no-deal outcome, and that includes helping businesses. I have allocated an additional £2.1 billion on top of the £2 billion that was already there, and that means that we can do much more to help businesses, including sending them more than 750 communications on preparedness and more than 100 technical notices.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Economic Secretary (Treasury)

The Government’s current policy is that we can have higher public spending, falling debt and a no-deal Brexit, but those three things are impossible to deliver together, so on which of them are the Government not telling the truth?

Photo of Sajid Javid Sajid Javid The Chancellor of the Exchequer

The Government are focused on leaving the European Union on 31 October. We are trying to do that with a deal, but if we do not, we will leave with no deal. The hon. Gentleman talks about the Government’s policy. At least this Government have a clear policy on Brexit; what is the policy of the Labour party?