27 November 2018

The Prime Minister has framed the meaningful vote as a choice between her deal, no deal, and no Brexit. Alex Stojanovic argues that the Government's economic analysis must reflect that choice.

The Government is expected to publish its economic analysis of the proposed Brexit deal this week. It was rumoured that the Government had intended only to show how Theresa May’s deal compared to no deal.

But last week, a cross-party group of MPs pushed through an amendment to the Finance Bill that forces the Government to include a “remain” – no Brexit – option.  

The inclusion of EU membership in the Government’s analysis will allow for easier comparison of the Government’s numbers to other studies including the two most recently published, by NIESR and UK in a Changing Europe.

All of these economic studies use “remain” (rather than no deal) as a baseline from which to compare the relative impact of various Brexit scenarios. Including remain will also allow people to judge the stand alone benefits of the PM’s deal by placing it in comparison to the current arrangement.

The Government’s economic modelling is still likely to be misleading

Reports say that the forthcoming economic analysis will be based on the Prime Minister’s original “Chequers” deal, rather than the political declaration. But the Chequers deal envisaged frictionless trade in goods underpinned by a “common rulebook” – whereas the political declaration studiously avoids this impression. The recent NIESR study assumed a more modest free trade agreement with at least some frictions to trade in goods.

But even with an optimistic version of the PM’s deal, the Government’s study is likely to conclude that no Brexit is more economically advantageous than the other options. Remaining in the EU would avoid new trade and migration barriers being introduced which most economic analysis finds outweigh any potential benefits from deregulation or other trade deals.

As a result, the economic analysis will underscore the compromise that even the most optimistic version of Theresa May’s deal represents – trading off economic benefits for greater control of immigration and laws. But it is unlikely to change many views in parliament.

For those who support the deal it will continue to be sold as a compromise that mitigates some of the impacts. For everyone else, it is the worst of all worlds that cedes too much for too little.

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