The Chancellor will have less money to spend in his budget today thanks to Brexit, research by the Open Britain campaign reveals today – despite the fact that the UK hasn’t even left yet.
Due to the vote to leave the European Union, tax receipts have taken a hit due to greater weakness in the property market, debt interest repayments have risen due to the value of the pound, and new areas of Government spending have been created, such as preparing for a no deal Brexit.
These are the six times Philip Hammond’s hands have been tied by Brexit:
- Stamp duty land tax receipts have fallen by £900 million;
- The UK Government will have to spend £517 million on relocating the European Medicines Agency;
- The deficit has increased by £500 million;
- The Department for Exiting the EU and the Department for International Trade will cost £412 million;
- The Government has allocated £250 million of spending for departments to prepare for Brexit with no deal;
- Government lawyers spent £1 million fighting the Gina Miller legal case.
Infrastructure spending is also due for a hit, as it was revealed in August that an effective “moratorium” has been imposed on loans to the UK by the European Investment Bank (EIB). The EIB loaned £6.9bn to the UK in 2016.
Commenting, Alison McGovern MP, leading supporter of Open Britain, said:
“I know what most Brits want their Chancellor to prioritise in his budget – extra money for our National Health Service, greater resources for our schools, and more housing for our young people.
“But Philip Hammond’s hands are tied by Brexit. He’s had to fork out for more bureaucrats to manage Brexit, instead of nurses in our hospitals. The plunge in the value of the pound has pushed up the price of servicing our debt. And as the economy has weakened, tax receipts have fallen.
“Nobody voted last year for our public services to have fewer resources. Indeed the likes of Boris Johnson and Michael Gove promised us £350 million more a week for the NHS. Yet Brexit has resulted in less money to go around, not more.
“As new facts emerge and as the rush to a hard Brexit continues to make Britain poorer, voters have the right to keep an open mind.”
Notes to editors:
The story on EIB funding in the UK is here: http://www.eib.org/projects/regions/european-union/united-kingdom/index.htm
- Stamp duty land tax receipts are £900 million lower. According to the Office for Budget Responsibility’s Forecast Evaluation Report in October 2017, “receipts [of SDLT] were £0.9 billion lower than our March 2016 forecast. The underlying forecasting shortfalls largely reflected weakness in the commercial sector, which reflected uncertainty in the run-up to and following the EU referendum and possibly a larger-than-expected behavioural response to the commercial SDLT ‘slab-to-slice’ reform announced in March 2016.”
- £517 million to relocate the European Medicines Agency. The EU has insisted that the UK must pay the cost of relocating the European Medicines Agency – which employs 900 people – from London to Amsterdam. The EU estimates this will cost €582.5m (£517m).
- £250 million on preparing for a no deal Brexit. In the House of Commons on 11th October 2017, Theresa May said: “The Treasury has committed over £250 million of new money to Departments such as the Department for Environment, Food and Rural Affairs, the Home Office, Her Majesty’s Revenue and Customs and the Department for Transport in this financial year for Brexit preparations.”
- £500 million higher debt interest repayments. ONS figures show that the deficit in October has risen by £500 million to £8 billion, due to an increase in the cost of servicing debt interest. This was due to the fall in the value of the pound, which fell by 15% after the Brexit vote.
- £412 million on setting up the Brexit departments. According to the 2016 Autumn Statement, the Government will spend £412 million on setting up and then running the Department for Exiting the European and the Department for International Trade.
- £1 million on the Gina Miller legal case. The Government admitted in July that it spent £1.2 million fighting the legal case brought by Gina Miller, which confirmed that Parliament would need to have a vote on whether or not to trigger Article 50.