The UK economy could enjoy a post-Brexit financial dividend of £135bn in the five years after its departure from the EU, Jacob Rees-Mogg has said, an opinion that attracted a direct if brief endorsement from the Department for International Trade.
At a speech in London, the leading pro-Brexit backbencher lambasted what he called the “false assumptions” of Philip Hammond’s Treasury before next week’s budget, insisting that leaving the EU would provide a huge economic boost.
In an apparent sign of continuing government divisions over Brexit, the trade department tweeted a link to an approving article about Rees-Mogg’s arguments from its official account.
Although the tweet was later deleted, the international trade secretary, Liam Fox, is a long-time ardent Brexiter whose views on the subject are generally seen as much closer to those of Rees-Mogg than Hammond.
Rees-Mogg, viewed by some as a possible contender for the Tory leadership if Theresa May falls, was speaking to introduce an alternative pre-Brexit budget put together by a group called Economists for Free Trade.
He endorsed the group’s alternative budget plan, which argues that a “clean” or hard Brexit – one which would put Britain outside the EU’s single market and customs union – would deliver a £135bn boost to the economy between 2020 ans 2025, and another £40bn a year after that.
Rees-Mogg said this would only be possible if the government pursued a policy of free trade, reduced regulation and lower taxes. He believe corporation tax should be almost halved to 10%, and stamp duty lowered to help the London property market.
Such a route seemed impossible given the current mindset in the Treasury, he said, adding: “The window of post-Brexit freedom will remain firmly shut to those forecasters who subscribe to the modelling approach adopted by HM Treasury, which has a neo-protectionist approach and an inbuilt bias towards a pessimistic assessment of Brexit.”
A good proportion of this supposed Brexit dividend should be used for extra spending on the NHS, Rees-Mogg said, referring to the hugely contentious promise by leave campaigners of £350m a week more for health spending post-Brexit.
“Although I did not want the £350m figure used, it was used, and the electors believe a promise was made,” he said. “Politicians cannot and should not hide behind the small print, like some disreputable businesses do, but must recognise that a commitment was accepted in broad terms, not in pettifogging detail.”
The alternative budget was put together by a team led by Patrick Minford, professor of economics at Cardiff University, a controversial Brexit advocate who has previously argued that his vision of a UK economy without government subsidies could almost wipe out the agriculture and manufacturing sectors.
Speaking at the event, Minford argued that a no-deal Brexit would deliver an even bigger boost to the UK economy as it would mean the new era of free trade and reduced regulation could begin sooner.
However, Rees-Mogg said he believed the UK should remain at the negotiating table all the way to Brexit, not least to try and maintain good relations with EU member states.
He also argued that a trade deal was likely, saying the UK should exert pressure on this by threatening to immediately stop its payments to the EU budget, rendering the bloc “effectively insolvent”.
He said: “I think our position in asking for a deal is very strong. If we say we are not continuing to contribute without a deal to the last 21 months of the multi-annual financial framework, the EU will have a huge hole in its budget.”
Rees-Mogg said it was time to look beyond the projections for Brexit provided by the government’s Office for Budget Responsibility.
“I am confident that the UK’s medium-term fiscal prospects are much better than those that will be revealed to you by the OBR’s short-term projections,” he said. “It does its work worthily and reputably but based on false assumptions supplied to it by the Treasury.”
The Labour MP Chuka Umunna, who supports the anti-hard Brexit campaign group Open Britain, said it was “deeply concerning” that Fox’s department was tweeting apparent support for the Economists for Free Trade report.
He said: “The government claims that rights which protect working people will be unaffected by Brexit. But now Liam Fox’s department is supporting a report which calls for employment rights to be slashed after we leave the EU.”
