Official Gov’t Figures Now Show Johnson’s Brexit Will Cause Significant Hit To Households
By TruePublica: Talk to most people in favour of Brexit and no matter what statistic you are armed with the response will inevitably be something like – ‘huh – Project Fear still working then.’ But this set of statistics comes from Britain’s official department of propaganda – No10 Downing Street. It’s just that they didn’t want you to know this. And the inconvenient truth is if the governments’ own statisticians are right – Boris Johnson’s deal will throw the country into a deep recession just as bad as the calamitous 2008 bank-led financial crash. No – not Project Fear – just their own stats.
The UK House of Commons has voted to pass Boris Johnson’s version of Brexit deal into law. So, it’s a foregone conclusion that in little more than a week Britain will no longer be a member of the EU. The deal really means Britain will have a significantly more distant relationship with the EU than that agreed by former Prime Minister Theresa May, which was then considered a bad deal, especially by Boris Johnson.
In survey after survey, the British public seems aware that economic trouble is coming their way and they are resigned to it. Everyone knew that Brexit was always going to come at an economic cost. However, Johnson’s government has repeatedly refused to reveal their own assessment of the potential damage his own deal will do to the UK economy.
However, analysis published by the UK government has quite clearly stated that a deal along the lines of that agreed by Johnson would have a major adverse economic impact on the UK. The big hits will come in the form of declining economic growth leading to falling wages. The report continually uses the phrase – ‘long-term economic analysis’ not what is expected in the very near future.
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We already know that by the end of 2020, Britain’s economy will be £200billion smaller than if it had remained an EU member. This is due to uncertainty leading to a collapse general R7D and investment and of inward investment. Many companies have relocated or gearing up for it. However, what we have not been told is that Johnson’s own government’s analysis suggests that a deal along the lines of that backed by Parliament will reduce annual economic growth by 6.7% compared to staying in the EU. Again, the report only estimates long-term expectations.
The Great Recession, the longest on record since the last World War, saw economic output decline 7% and unemployment rise to 8.3%. In the last 3 years, Britain’s economy has already shrunk and by the end of this year, it is estimated to be 3% smaller.
Let that sink in – another recession about the same as the worst one on record is expected by a government who created it just to stay in power.
To confirm government statistics, another analysis of Johnson’s deal last October by one independent think tank found an almost identical hit to the economy of 6.4%.
This is due largely to new barriers to trade created by the arrangement, including the costs of new customs arrangements.
That amounts to a major hit to the UK economy which will make average households much worse off over the coming decade than they would have been had we remained in the EU.
The model assumes no change to migration arrangements and that the economy in terms of wages would contract -10%, -6.4% and -1.5% respectively. Factor in that the economy is now already stalling, interest rates are likely to fall as will the value of Sterling (creating inflationary pressures on imported goods) and there’s a perfect recipe for a nasty recession.
Workers’ rights are also expected to be another casualty after Johnson removed legally binding commitments to retain existing EU work regulations from the agreement after being elected.
The economic hit will inevitably lead to the UK government being forced to borrow more, or dramatically slash the services it provides to the public. In other words, if these statistics by the government come true, taxes will have to rise or another decade long round of austerity will need to be imposed (or a mix of both).
The only other option is that the government borrows more and pushes up the national debt – already costing just under £50billion to service in debt interest as it approaches £2trillion (which is roughly 4% of GDP or 8% of UK government tax income).
According to the government’s own analysis, there will be just over a 3% increase in borrowing as a percentage of economic growth.
Clearly, these are estimates but they do fall in line with other economists expectations who have been predicting similar numbers. And while negotiations over the final shape of Britain’s future relationship have not yet begun there appears to be growing anger among EU negotiators about the timing of thrashing out a deal. The EU or any other trading bloc for that matter (including the WTO) have never managed to agree a major trade deal in under one year – the average taking seven years. If a trade deal is not signed with the EU by the end of the year, Britain will crash out. If that happens, we could be looking at an economic contraction approaching double digits.
No matter which way you look at this, the framework of the Brexit deal clearly determines a significant hit to the UK economy. From the standpoint of money to the average household, there are no upsides in sight for the medium to longer term.