Belfast Telegraph

Office for Budget Responsibility defends forecasts warning of Brexit cost

The head of the official budget watchdog has defended its economic forecasts warning of the cost to Britain of leaving the European Union.

The Office for Budget Responsibility (OBR) infuriated pro-Brexit Conservatives with its prediction that withdrawal would wipe 2.4% off growth over the next five years while adding almost £60 billion to borrowing.

MPs such as former Cabinet minister Iain Duncan Smith and backbencher Jacob Rees-Mogg said leaving the EU would lead to a more liberal trade regime delivering a boost to the UK economy.

However OBR chairman Robert Chote said it was obliged to produce forecasts based on currently stated Government policy.

"The job that we have been given explicitly by Parliament is not to predict what we think the most likely outcome is going to be in the future but what the most likely outcome is conditional upon the current stated policy of the Government," he told the BBC Radio 4 Today programme.

"Obviously the outlook for policy as regards Brexit is not as clearly set out. We don't know what exactly the Government is going to be aiming for and what could be delivered in the negotiations on things like the trade regime, migration.

"We asked them whether they wanted to tell us any more about their policy in all of these areas than is already in the public domain and they said 'no'.

"Clearly it would have put us in a very difficult position if they had told us something and said we can't share that with the rest of the world."

Mr Chote said that as the likely shape of any post-Brexit settlement became clearer, it could feed into future forecasts but he warned that was unlikely to happen quickly.

"Will we end up in a world in which there are much lower tariffs both for us and for other countries? Are we going to end up with a very different looking migration regime? That remains to be seen," he said.

"For the time being we are left with the information that we have and that's what we can feed into the forecasts at this stage.

"We need the policy to clarify itself but we also shouldn't delude ourselves that it is going to clarify itself very quickly."

Supporters of Brexit highlighted figures in the OBR report, which estimated that Britain's net contribution to Brussels budgets if the country does not leave the EU would be £10.4 billion in 2019/20, £10.6 billion in 2020/21 and £10.9 billion in 2021/22.

The £31.9 billion total over the three years after the expected withdrawal date of March 2019 equates to around £205 million a week, compared with the £350 million which Vote Leave famously claimed would be saved during the referendum campaign.

Thirteen leading Leave campaigners, including Change Britain chairwoman Gisela Stuart, former Cabinet minister Michael Gove and Conservative MP Steve Baker described this as a "Brexit dividend" and urged the Government to commit to spending it on the NHS.

They said: "When we leave the EU we will be able to take back control of the billions of pounds of taxpayers' money we send to Brussels each year. We will be able to decide how we spend that money rather than EU bureaucrats.

"The OBR has revealed that the British people will get back over £10 billion net a year once we leave the EU. We believe that this Brexit dividend should be spent on our priorities - the most important of which is our NHS."

However, the OBR document makes clear that the forecasters had already taken any savings on EU contributions into account when calculating that Britain is facing a £122 billion hit to its public finances over the next five years, almost £60 billion of it attributable to the Brexit vote.

In its report, the OBR said it was not able to make any forecast of how much money would be saved and had therefore worked on "the fiscally neutral assumption that any reduction in these transfers to the EU would be recycled fully into extra domestic spending".