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| Philip Hammond defends 'doom and gloom' Brexit forecast Philip Hammond defends 'doom and gloom' Brexit forecast | |
| (5 days later) | |
| Philip Hammond has said the government cannot ignore the £59bn black hole in the public finances directly related to Brexit, as pro-leave Tories criticised the economic forecast as overly pessimistic. | Philip Hammond has said the government cannot ignore the £59bn black hole in the public finances directly related to Brexit, as pro-leave Tories criticised the economic forecast as overly pessimistic. |
| Speaking after his first autumn statement, where he outlined plans for modest further borrowing to boost investment in infrastructure, Hammond said forecasts from the Office for Budget Responsibility (OBR) for the costs of leaving the EU were based on a “a very high degree of uncertainty in the circumstances we are in”. | Speaking after his first autumn statement, where he outlined plans for modest further borrowing to boost investment in infrastructure, Hammond said forecasts from the Office for Budget Responsibility (OBR) for the costs of leaving the EU were based on a “a very high degree of uncertainty in the circumstances we are in”. |
| Eurosceptic Conservatives including the former work and pensions secretary Iain Duncan Smith said the OBR forecast was “another utter doom and gloom scenario” and criticised the advisory body, which he said “simply hasn’t got anything right”. | Eurosceptic Conservatives including the former work and pensions secretary Iain Duncan Smith said the OBR forecast was “another utter doom and gloom scenario” and criticised the advisory body, which he said “simply hasn’t got anything right”. |
| “The key thing is that the OBR has been wrong in every single forecast they have made so far,” he told Sky News. “On the deficit, on growth, on jobs, they have pretty much been wrong on everything.” | “The key thing is that the OBR has been wrong in every single forecast they have made so far,” he told Sky News. “On the deficit, on growth, on jobs, they have pretty much been wrong on everything.” |
| Though cautioning that economic forecasting was “not an exact science”, Hammond said the Treasury was preparing for “very challenging fiscal circumstances”. | Though cautioning that economic forecasting was “not an exact science”, Hammond said the Treasury was preparing for “very challenging fiscal circumstances”. |
| “We should certainly not ignore it but look at it as one of the possible ranges of outcomes we need to plan for. We should note what it says about the strength of our economy, and the OBR has upgraded its forecast for our economic growth this year,” he told BBC Radio 4’s Today programme. | “We should certainly not ignore it but look at it as one of the possible ranges of outcomes we need to plan for. We should note what it says about the strength of our economy, and the OBR has upgraded its forecast for our economic growth this year,” he told BBC Radio 4’s Today programme. |
| Hammond said the OBR’s forecasts, a £21bn deficit with public debt expected to peak at more than 90% of GDP, were not only based on the uncertainty linked to the Brexit negotiations but also the election of Donald Trump and his attitude to free-trade agreements with the rest of the world. | Hammond said the OBR’s forecasts, a £21bn deficit with public debt expected to peak at more than 90% of GDP, were not only based on the uncertainty linked to the Brexit negotiations but also the election of Donald Trump and his attitude to free-trade agreements with the rest of the world. |
| “There’s uncertainty around the future course of policy in the US, uncertainty about global trade, uncertainty about the growth rate of the Chinese economy,” he said. | “There’s uncertainty around the future course of policy in the US, uncertainty about global trade, uncertainty about the growth rate of the Chinese economy,” he said. |
| “We should have a plan, and that’s what I outlined yesterday, which both invests in our economy to build on strengths but provides for perhaps a little more rainy day next year and the year after as the OBR forecast says.” | “We should have a plan, and that’s what I outlined yesterday, which both invests in our economy to build on strengths but provides for perhaps a little more rainy day next year and the year after as the OBR forecast says.” |
| The government itself was unable to accurately predict what the outcome of negotiations with the EU would be once the UK triggered the two-year article 50 process for leaving the bloc, Hammond said. | The government itself was unable to accurately predict what the outcome of negotiations with the EU would be once the UK triggered the two-year article 50 process for leaving the bloc, Hammond said. |
| “It’s not about what we want the outcome to be. It’s going to be a negotiation. We are going to sit at a table with the representatives of the European Union and no one can say for certain what the outcome of that negotiation will be,” he said. “That’s what creates the uncertainty.” | “It’s not about what we want the outcome to be. It’s going to be a negotiation. We are going to sit at a table with the representatives of the European Union and no one can say for certain what the outcome of that negotiation will be,” he said. “That’s what creates the uncertainty.” |
| The Conservative MP Jacob Rees-Mogg, an arch-Eurosceptic, said the economy had consistently outperformed predictions since the Brexit vote in June and the OBR’s forecasts were “particularly gloomy on the prospects for financial services”. | The Conservative MP Jacob Rees-Mogg, an arch-Eurosceptic, said the economy had consistently outperformed predictions since the Brexit vote in June and the OBR’s forecasts were “particularly gloomy on the prospects for financial services”. |
| “Suspicion of experts goes back into antiquity. Experts, soothsayers, astrologers are all in much the same category,” he told the BBC. | “Suspicion of experts goes back into antiquity. Experts, soothsayers, astrologers are all in much the same category,” he told the BBC. |
| His fellow Tory MP Anne-Marie Trevelyan said the figures were created by “throwing into a pot and coming up with a set of potential outcomes ... predictions that have come out of the Treasury, the OBR and even the Bank of England have proved to be wildly inaccurate at times”. | His fellow Tory MP Anne-Marie Trevelyan said the figures were created by “throwing into a pot and coming up with a set of potential outcomes ... predictions that have come out of the Treasury, the OBR and even the Bank of England have proved to be wildly inaccurate at times”. |
| The Labour MP Gisela Stuart, who chairs the pro-Brexit Change Britain, said: “Predictions for a loss of investment and trade for the next 10 years do not seem credible. | The Labour MP Gisela Stuart, who chairs the pro-Brexit Change Britain, said: “Predictions for a loss of investment and trade for the next 10 years do not seem credible. |
| “Outside of the EU’s single market we can look forward to an even stronger economy – with better regulation and free trade deals with some of the fastest growing economies in the world. This will benefit businesses large and small and help to create jobs and spread prosperity across the country.” | “Outside of the EU’s single market we can look forward to an even stronger economy – with better regulation and free trade deals with some of the fastest growing economies in the world. This will benefit businesses large and small and help to create jobs and spread prosperity across the country.” |
| The former Labour leader Ed Miliband criticised the leave campaigners for their attacks on the OBR, tweeting: | The former Labour leader Ed Miliband criticised the leave campaigners for their attacks on the OBR, tweeting: |
| Now Brexiteers attack OBR. They can't win argument for hard, destructive Brexit based on truth so have to try and win based on fantasy. | Now Brexiteers attack OBR. They can't win argument for hard, destructive Brexit based on truth so have to try and win based on fantasy. |
| Paul Johnson, of the Institute for Fiscal Studies, told the Today programme the OBR’s forecasts were “considerably more optimistic than those we have from most independent forecasters, and significantly more so than those we have from the Bank of England”. | Paul Johnson, of the Institute for Fiscal Studies, told the Today programme the OBR’s forecasts were “considerably more optimistic than those we have from most independent forecasters, and significantly more so than those we have from the Bank of England”. |
| “We really don’t know very much about where we will be, certainly after 2019,” he said. | “We really don’t know very much about where we will be, certainly after 2019,” he said. |
| Speaking earlier on the programme, the shadow chancellor, John McDonnell, said Hammond had some wrong economic priorities given the uncertain economic climate. | Speaking earlier on the programme, the shadow chancellor, John McDonnell, said Hammond had some wrong economic priorities given the uncertain economic climate. |
| “They have given tax giveaways on capital gains tax, corporation tax, inheritance tax to the wealthy in our community and corporation, cutting universal credit to people they call Jams – just about managing – people going into work, looking after their families, doing everything they ask for,” he said. | “They have given tax giveaways on capital gains tax, corporation tax, inheritance tax to the wealthy in our community and corporation, cutting universal credit to people they call Jams – just about managing – people going into work, looking after their families, doing everything they ask for,” he said. |