Commenting on the OBR’s Forecast Evaluation Report, published today, Ben Bradshaw MP, leading supporter of Open Britain, said:
“Today’s report by the OBR once again highlights the risks of the extreme Brexit path which the Government is taking us down.
“Productivity growth is down, lower growth is expected, the trade deficit is widening and living standards are falling. The last thing the economy and our public services need now is for Britain to be dragged out of the Single Market and Customs Union.
“Today’s figures have blown a huge hole in the Government’s Brexit war chest. And yet still the Prime Minister entertains the idea of leaving with no deal whatsoever. It is reckless in the extreme.”
Notes to editors:
For all bids and media enquiries, contact Will Cousins on 07801 231485. When using this quote, please reference the Open Britain campaign.
The OBR’s 2017 Forecast Evaluation Report is here: http://budgetresponsibility.org.uk/fer/forecast-evaluation-report-october-2017/
Here are the key Brexit-related conclusions from the report:
- The Brexit vote has hit productivity:
“Heightened uncertainty created by the Brexit vote may also have encouraged firms to expand production by increasing inputs of relatively flexible labour rather than less easily reversed investment in capital.”
“The renewed weakness of productivity so far in 2017 may in part be a temporary effect of the Brexit vote and the uncertainty that it has generated.”
“The renewed weakness of productivity growth over the first half of 2017 will almost certainly have been exacerbated by the Brexit vote, notably by the temporary hit to real consumption and GDP growth resulting from the fall in the exchange rate.”
- Markets expect lower UK growth after Brexit:
“Lower long-term interest rates are also consistent with the market pricing in weaker future UK growth prospects after Brexit.”
- The OBR’s post-referendum prediction that the Brexit vote would hit business investment has been proved right:
“Even on the revised data business investment has been significantly weaker than our pre-referendum forecasts.”
“The referendum result generated uncertainty about investment returns that would cause some investment to be postponed or cancelled. Business investment has indeed been much weaker than our March 2016 forecast, although slightly above our November 2016 forecast on the latest data.”
- The fall in the value of the pound has hit living standards, but it has not boosted exports to the extent expected:
“Household real incomes and spending were squeezed by higher inflation following the fall in the pound after the EU referendum.”
“The depreciation of sterling would boost net trade in the short term. While the direction of the effect has been as expected, the extent has not. While net trade has not dragged on GDP growth as we forecast in March 2016, it has provided less of a boost than we expected in November 2016.”
- The Brexit vote has hit the property market and reduced the tax take from stamp duty:
“Transactions since the second half of 2016 have been much more subdued than we expected, perhaps partly due to the uncertainty that has followed the referendum result.”
“Stamp duty land tax (SDLT) receipts were close to our March 2015 forecast, as subsequent policy changes offset a shortfall in our underlying forecast. Receipts 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.”