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The Treasury will not carry out any further analysis of the economic impact of the Brexit trade deal Boris Johnson agrees with the EU or the impact of negotiations collapsing, Rishi Sunak has said.
The chancellor said he was not planning to revisit the issue despite negotiations nearing their conclusion and the UK preparing for an entirely new set of trading arrangements from December 31, the end of the transition period.
Government analysis in November 2018 predicted that leaving without a trade deal would cause a 7.6% contraction in the economy, while leaving with an “average” free trade agreement would cause a 4.9% reduction in GDP, compared to the UK continuing as an EU member.
Since then, the shape of Brexit has changed considerably after Johnson took over from Theresa May as prime minister and pursued a much looser trading arrangement with the EU.
The Financial Times reported this week that new trade arrangements could leave the UK with a £7bn bill as firms navigate new red tape to export and import goods to and from the EU.
At the Commons Treasury committee, Tory former Treasury minister Harriet Baldwin asked if the Treasury would carry out any fresh analysis in light of the new situation.
Sunak, who campaigned for Leave, replied: “No specific plans.”
He added: “One thing that I am very humble about is the ability of economic forecasting, particularly right now, to be that accurate.”
Baldwin put to Sunak that Michael Gove had set out potential costs to businesses and asked Sunak if he would analyse what that meant for economic growth.
The chancellor replied: “We haven’t done a macro forecast and we’re not planning to.
“And given all the other uncertainty we are seeing in our economy it would not be a particularly accurate or constructive exercise.
“But you’re right, on the discrete things that we’re doing as part of preparing for a new sort of trading relationship, it’s right that as CDL [chancellor of the Duchy of Lancaster, Michael Gove] did, we provide information around that.”
Turning to coronavirus, Sunak signalled he may cut spending or hike taxes to raise money to pay for the hundreds of billions of pounds he has spent supporting workers and businesses through the pandemic and lockdown.
“We of course look at everything all the time – that’s what we do,” the chancellor said.
“In terms of what does that mean for spending and taxes, those are decisions that will have to wait until we get to Budgets, but there are tough choices ahead – that is clear.
“We have an ambition to deliver upon our priorities and the promises we made. We’ve been through, hopefully, this once-in-a-lifetime episode. It has had an enormous impact on our economy, on jobs, [and on] our public finances – and that means there are tough choices to come.
“It is difficult for us to go into more detail than that.”