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Philip Hammond: Brexit will leave UK economy worse off Brexit: Any form makes UK poorer, suggests Treasury analysis
(35 minutes later)
All forms of Brexit will make the UK worse off but Theresa May's plan is the best available, says Philip Hammond. The UK will be poorer economically under any form of Brexit, compared with staying in the EU, Treasury analysis suggests.
Treasury analysis of Mrs May's deal suggests it will leave the size of the UK economy up to 3.9% smaller after 15 years, compared with staying in the EU. Official figures say the UK economy could be up to 3.9% smaller after 15 years under the PM's Brexit plan, compared with staying in the EU.
But a no-deal Brexit could deliver a 9.3% hit, the new estimates say.But a no-deal Brexit could deliver a 9.3% hit, the new estimates say.
Mr Hammond told BBC Radio 4's Today programme it was not just about the economy and Mrs May's deal would deliver "political benefits". Chancellor Philip Hammond said the deal was not just about the economy, but would deliver "political benefits" too.
With two weeks until MPs vote on the deal, Mr Hammond said: "We're going to go out and we're going to sell this deal." The Treasury estimates do not put a cash figure on the potential impact on the economy, but independent experts have said that 3.9% of GDP would equate to around £100bn a year by the 2030s.
He said if the deal was not voted through Parliament, Mrs May's cabinet would sit down and "decide how best to proceed", looking at how MPs had voted before deciding their next move. The 83-page document does not attempt precisely to forecast the impact of Mrs May's deal.
But it compares the likely impact of the proposals agreed by the Cabinet at Chequers in July and set out in the government's White Paper with the alternative scenarios of Norway-style membership of the European Economic Area, a Canada-style free trade agreement with the EU and a no-deal Brexit.
It finds that GDP will be lower in 15 years under all Brexit scenarios than it would be with EU membership. And in all cases, national income will be reduced if migration from Europe is reduced from its current levels.
It was released as the prime minister prepared to head to Scotland on the latest stage of a tour of all parts of the UK to promote her deal to voters ahead of a Commons vote on her deal on 11 December.
Mr Hammond said if the deal was not voted through Parliament, Mrs May's cabinet would sit down and "decide how best to proceed", looking at how MPs had voted before deciding their next move.
Under any scenario, in a "purely economic sense" the UK would be worse off than if it stayed in the EU, as exiting would created "impediments to our trade", said the chancellor.Under any scenario, in a "purely economic sense" the UK would be worse off than if it stayed in the EU, as exiting would created "impediments to our trade", said the chancellor.
But he argued that staying in the EU was not politically "viable" and, he added, Mrs May's planned Brexit deal combined most of the economic benefits of remaining in the EU with the political benefits of leaving the EU.But he argued that staying in the EU was not politically "viable" and, he added, Mrs May's planned Brexit deal combined most of the economic benefits of remaining in the EU with the political benefits of leaving the EU.
Asked if the UK would be poorer under Mrs May's deal, Mr Hammond said: "The economy will be slightly smaller in the prime minister's preferred version of the future partnership."Asked if the UK would be poorer under Mrs May's deal, Mr Hammond said: "The economy will be slightly smaller in the prime minister's preferred version of the future partnership."
He said Mrs May's deal would reduce to "an absolute minimum the economic impact of leaving the EU, while delivering the political benefits" such as being able to do trade deals outside the EU and "having control of our fishing waters".He said Mrs May's deal would reduce to "an absolute minimum the economic impact of leaving the EU, while delivering the political benefits" such as being able to do trade deals outside the EU and "having control of our fishing waters".
Analysis
By BBC Business Editor Simon Jack
It's official: Brexit will make us poorer than we would be staying in the European Union.
That is the conclusion of a cross-departmental government 15-year forecast.
How much poorer depends on which Brexit route the UK takes, but the most likely outcomes would mean a hit to the economy of £60bn and £100bn with a no-deal scenario costing nearly £200bn.
The 82-page report looks at four main scenarios.
They are: the government's preferred outcome with frictionless trade; a standard free trade agreement, which means some friction at the border; a Norway-type arrangement, which would mean freedom of movement and ongoing rule taking; and finally, no deal.
Read more from Simon
Veteran Conservative Eurosceptic Sir Bill Cash said Mr Hammond was effectively arguing for the UK to stay in the European Union in his "extraordinary" statement.Veteran Conservative Eurosceptic Sir Bill Cash said Mr Hammond was effectively arguing for the UK to stay in the European Union in his "extraordinary" statement.
He said the chancellor had ignored potential economic benefits of leaving the EU, asking: "What about the trade deals which could give us the most enormous opportunities throughout the world, if we are able to strike them?"He said the chancellor had ignored potential economic benefits of leaving the EU, asking: "What about the trade deals which could give us the most enormous opportunities throughout the world, if we are able to strike them?"
Under Mrs May's deal, the UK would be able to negotiate trade deals during the transition period after 29 March's Brexit day, but would not be able to implement them until the end of the planned 21 month transition period, which could itself be extended.Under Mrs May's deal, the UK would be able to negotiate trade deals during the transition period after 29 March's Brexit day, but would not be able to implement them until the end of the planned 21 month transition period, which could itself be extended.
Sir Bill, who is among the MPs to have submitted a letter of no-confidence in Theresa May in a bid to remove her as prime minister, said this would keep the UK tied to the EU "indefinitely" with no say over its rules.Sir Bill, who is among the MPs to have submitted a letter of no-confidence in Theresa May in a bid to remove her as prime minister, said this would keep the UK tied to the EU "indefinitely" with no say over its rules.
The chancellor's comments were seized on by MPs campaigning for another EU referendum, with Labour's Chris Bryant saying on Twitter: "Philip Hammond effectively conceded that the so-called deal is going nowhere and that after 11/12 all options should be on the table. That sounds like we are inching towards #PeoplesVote."The chancellor's comments were seized on by MPs campaigning for another EU referendum, with Labour's Chris Bryant saying on Twitter: "Philip Hammond effectively conceded that the so-called deal is going nowhere and that after 11/12 all options should be on the table. That sounds like we are inching towards #PeoplesVote."
MPs are due to vote on Mrs May's Brexit deal, which she insists is the only option, on 11 December.MPs are due to vote on Mrs May's Brexit deal, which she insists is the only option, on 11 December.
Can economic forecasts get it wrong?
By BBC Business Editor Simon Jack
A forecast is a bit like rolling two dice. The most common number you are likely to throw is a seven - that would be the central forecast.
Now, you could get two or you could get 12. That doesn't mean that the forecast of seven was wrong, it was just that a more unlikely outcome happened.
According to the Daily Telegraph, the Treasury analysis will show that under Mrs May's deal, the UK's GDP will be between 1% and 2% lower over 15 years than if it stayed in the EU, compared with 7.5% lower under a no deal situation.
The Department for Exiting the EU said it does not comment on leaks.
In other developments, the Commons Public Accounts Committee issued a report warning of a "real prospect" of "major disruption" at UK ports in the case of a no-deal Brexit.In other developments, the Commons Public Accounts Committee issued a report warning of a "real prospect" of "major disruption" at UK ports in the case of a no-deal Brexit.
The prime minister is heading to Scotland, where she is expected to tell workers in a factory near Glasgow she believes her deal provides an "unprecedented economic relationship that no other major economy has" and certainty for employers and their staff. Theresa May is later expected to tell workers in a factory near Glasgow she believes her deal provides an "unprecedented economic relationship that no other major economy has" and certainty for employers and their staff.
She will also say that moving away from the EU's common fisheries policy (CFP) "which has so tragically failed Scotland's coastal communities" will leave the UK "free to decide for ourselves who we allow to fish in our waters".She will also say that moving away from the EU's common fisheries policy (CFP) "which has so tragically failed Scotland's coastal communities" will leave the UK "free to decide for ourselves who we allow to fish in our waters".
The UK sells nearly £1bn of fish produce to the EU every year, and a number of EU countries are insisting that tariff-free trade of that kind can continue only if EU fishing boats continue to get access to UK waters.The UK sells nearly £1bn of fish produce to the EU every year, and a number of EU countries are insisting that tariff-free trade of that kind can continue only if EU fishing boats continue to get access to UK waters.
The SNP claims the industry will be "sold out".The SNP claims the industry will be "sold out".
The party says access to UK waters for EU boats will be used as a "bargaining chip" to secure a good post-Brexit trade deal.The party says access to UK waters for EU boats will be used as a "bargaining chip" to secure a good post-Brexit trade deal.
And Scottish First Minister Nicola Sturgeon has unveiled analysis the SNP claims shows Scotland would be left poorer by the deal.And Scottish First Minister Nicola Sturgeon has unveiled analysis the SNP claims shows Scotland would be left poorer by the deal.
Her party, which has 35 MPs, along with the leadership of Labour, the Lib Dems and Democratic Unionists have all said they will reject Mrs May's deal.Her party, which has 35 MPs, along with the leadership of Labour, the Lib Dems and Democratic Unionists have all said they will reject Mrs May's deal.
Many Tories have also said publicly they are opposed to Mrs May's deal.Many Tories have also said publicly they are opposed to Mrs May's deal.
Meanwhile, a row is brewing after the Labour Party demanded the government publish its full legal advice on the Brexit deal this week.Meanwhile, a row is brewing after the Labour Party demanded the government publish its full legal advice on the Brexit deal this week.
The government has only said it will publish a "full reasoned position statement" laying out its political and legal position on the withdrawal agreement.The government has only said it will publish a "full reasoned position statement" laying out its political and legal position on the withdrawal agreement.
BBC Newsnight political editor Nick Watt said a source says the full advice provides a "very stark warning" that there is no way the UK, on its own, would be able to get out of the so-called Northern Ireland backstop.BBC Newsnight political editor Nick Watt said a source says the full advice provides a "very stark warning" that there is no way the UK, on its own, would be able to get out of the so-called Northern Ireland backstop.
The backstop - the plan to create a temporary single customs territory to prevent the return of customs posts at the Irish border in the event no EU-UK trade deal comes into force - is controversial because Brexiteers fear it would keep the UK tied to EU rules indefinitely.The backstop - the plan to create a temporary single customs territory to prevent the return of customs posts at the Irish border in the event no EU-UK trade deal comes into force - is controversial because Brexiteers fear it would keep the UK tied to EU rules indefinitely.
Chancellor Philip Hammond said Downing Street will not be publishing the full legal advice because it would be "impossible for the government to function" if such confidential material was made public.Chancellor Philip Hammond said Downing Street will not be publishing the full legal advice because it would be "impossible for the government to function" if such confidential material was made public.
"There's a very important principle here, that the government must be able to commission impartial legal advice which absolutely tells it like it is to enable it to shape its decisions, while always complying with its legal obligation in the negotiations," he told Today."There's a very important principle here, that the government must be able to commission impartial legal advice which absolutely tells it like it is to enable it to shape its decisions, while always complying with its legal obligation in the negotiations," he told Today.