Brexit fury as EU divorce ‘overstated’ with ‘biased’ forecasts | UK | News
The Office for Budget Responsibility (OBR) has come under fire for allegedly exaggerating the economic impact of Brexit, with some accusing the watchdog of producing forecasts influenced by political bias. Critics have argued that the OBR’s forecasts suggesting the UK’s post-Brexit trading relationship with the EU could reduce long-term productivity by 4% exaggerated the reality. The watchdog attributes this largely to the rise in non-tariff barriers, which it says hinders the enjoyment of comparative advantage.
The financial institution assumes that both exports and imports will fall by roughly 15% in the long term compared to remaining in the EU, while new trade deals outside the bloc are expected to have only a marginal impact on economic growth. Higher-than-expected tariffs on EU imports are estimated to add an average of £1.9 billion annually. Annual income compared to previous estimates.
Lord Moynihan, a Conservative businessman and businessman, has written to OBR chairman Richard Hughes, calling for a review of the agency’s Brexit forecasts, which will otherwise risk them being revised downwards ahead of the upcoming Budget. Telegram reported.
He highlighted that the International Monetary Fund (IMF) predicts that the impact of Brexit on GDP will be closer to 2%, rather than the OBR’s forecast of 4%.
In his letter seen by The Telegraph, Lord Moynihan argued that productivity forecasts misrepresent the UK’s economic trajectory and risk encouraging overly cautious government policy.
Claiming that the predicted 4% fall in productivity was probably inaccurate, he noted that the OBR’s forecast was based on an average of 10 independent estimates, many of which assumed the UK would not be able to sign a trade deal with the EU.
He wrote: “I urgently urge you to ensure that the OBR reviews not only its latest forecasts but also its past forecasts and agrees to amend and warn them as soon as possible after reviewing the above.
“It is important that the government receives good economic commentary that is not ideologically biased about the impact of its policies.”
Even if the UK economy falls by more than the 6% of France or Germany, Brexit will not be blamed, he said, instead pointing to other “anti-growth policies” enacted by previous governments.
Despite earlier signals from Ms Reeves that it might be necessary to overturn the party’s manifesto commitment, the Treasury has confirmed that the budget scheduled for Wednesday, November 26 will not change income tax rates.
During the Autumn Budget announcement, the Chancellor will announce the government’s taxing and spending plans, as well as the latest economic and fiscal outlook from the OBR.
