A committee of MPs has asked the Treasury to produce a fresh analysis of what various Brexit scenarios would mean for the UK’s economy, saying there are gaps in its previous assessments.
In a letter to the department’s permanent secretary, Sir Tom Scholar, the chair of parliament’s Treasury Select Committee, Nicky Morgan called on the Treasury to update the guidance it published in November on the economic impact of various arrangements for leaving the EU.
She asked Scholar to clarify whether the November analysis remained relevant “given any advances in economic intelligence, data or modelling since then”, and whether officials in his department were updating the analysis to include additional Brexit scenarios.
The revised analysis should address potential changes to withdrawal arrangements that have been discussed in recent months, Morgan said.
She noted that the November analysis included a “unilateral free-trade” scenario in which it was assumed the UK would levy a zero-tariff on all imports of goods from all trade partners under World Trade Organisation non-preferential trading arrangements.
But since then, the government has announced a different tariff schedule that it has said will apply to all imports if the UK leaves the EU without a withdrawal agreement, which Morgan said “amounted to less than full ‘unilateral free trade’.”
After it published its last analyses, committee said the government had failed to provide analysis of important potential scenarios including a long-term analysis of a scenario in which the UK enters a customs agreement with the EU under the backstop; and short and medium-term analysis of the fiscal, sectoral, regional and employment impacts of leaving the EU.
“If government or the Treasury is unable to undertake this short-term analysis, I would be grateful for an explanation, including a statement on the extent to which the Treasury’s short-term modelling capability has eroded since the establishment of the Office for Budget Responsibility in 2010 and the publication of the Treasury’s short-term analysis of the UK exiting from the EU ahead of the EU referendum in 2016,” Morgan said.
In a separate letter, Morgan asked Bank of England governor Mark Carney to confirm whether the economic analysis the bank had produced previously remained "fully relevant" given the more recent developments.
"If not, I would appreciate it if you could explain how developments since November may have changed the outlook in each scenario and, where it aids understanding, provide the committee with an updated version of the economic analysis.