Britain will be poorer under every possible form of Brexit compared with staying in the European Union, Philip Hammond admitted today.
Setting out the Treasury’s assessment of leaving the bloc, the chancellor said the “there will be a cost to leaving the European Union because there will be impediments to our trade”.
Hammond said taking an economic hit from quitting the EU was inevitable since it “introduces some level of friction in our trade”.
The Treasury’s analysis published today forecast reductions in economic output to 2035-36 under all Brexit arrangements when compared to the UK’s current EU membership, ranging from an economy that would be 7.6 percentage points smaller under a no-deal exit to one that would be 0.7 points smaller under the prime minister’s agreement with the European Union.
Asked on BBC Radio 4 this morning if the UK would be poorer in every Brexit scenario, he said: “Yes you are right in that analysis.”
He added: “If you look at this purely from an economic point of view there will be a cost to leaving the European Union because there will be impediments to our trade.”
But he insisted the deal agreed by prime minister Theresa May “reduces to an absolute minimum the economic impact of leaving the EU whilst delivering us the political benefits”.
He said the agreement - which MPs are set to vote on in less than two weeks – was the “optimum way of leaving” the bloc and the economic impact would be “entirely manageable”.
The draft withdrawal agreement – and the political declaration outlining plans for future trade with the bloc - are all-but certain to be voted down by MPs when they come before the Commons on 11 December.
MPs across the political divide, including some 90 Conservative MPs, argue the plans leave the UK too closely tied to EU rules and could create a regulatory border down the Irish Sea.
Legal advice row
Elsewhere, Hammond batted away calls for the government to release in full its legal advice on the Brexit deal.
Labour has responded with fury after it emerged ministers could publish just a summary of the advice, despite having suggested to the Commons that MPs would get the full details.
But the chancellor said: “It would be impossible for government to function if we set a precedent that the legal advice government receives has to be made public.
“We must have – as every other citizen in the country has – the right to take privileged legal advice which is private between the lawyer and the client, so that the client has the ability to ask the difficult questions, to receive full and frank legal advice and then to make decisions based on that full and frank legal advice.”