There is no £50 billion bonus from cancelling Brexit
Getting Brexit done would end economic uncertainty and as the UK adopts a better growth policy we will see a rise in investment, says John Redwood.
One of the more absurd claims in this election is there would be a big bonus to share if we stopped Brexit. This is based on various false economic forecasts that claim our growth rate will be impaired by Brexit, leading to the equally false idea that if we tore up the referendum result growth would suddenly accelerate.
The UK economy performed well in the year after the Brexit vote, despite all the official and independent forecasts of an early recession in that first year if we voted to leave. Since then the UK economy has slowed, but by less than many other economies, as a result of a world downturn in manufacturing aggravated by a fiscal and monetary squeeze at home. The current government is now going to lift this squeeze which should lead to improvement next year.
If by a £50 billion increase they mean a 2% increase in the growth of GDP, this does not suddenly become available as tax revenue. Indeed tax revenue would go up by a little under £20bn in such a circumstance. To get £50bn more tax for the state to spend there would need to be large £125bn increase in GDP, or well over 5%.
Just as the forecast of a big decline in GDP in the year or two after the vote was comprehensively wrong, so too is this forecast. As we are still in the EU with the same trading arrangements it is difficult to see how there would be anything like this fabled increase. For any company that did decide it wanted to invest more because the uncertainty had gone there would be another company disappointed that the opportunities of Brexit had been thrown away becoming more concerned about UK investment.
As the UK adopts a better growth policy – as this government wishes to do – so investment will rise anyway. Getting Brexit done would in itself be a welcome end to uncertainty.
John Alan Redwood, Baron Redwood, is a British politician and academic who represented Wokingham in Berkshire as Conservative Member of Parliament from 1987 to 2024. Born on 15 June 1951, he served as Secretary of State for Wales under John Major and twice stood unsuccessfully for the Conservative Party leadership during the 1990s. Following his ministerial career, Redwood held positions in the Shadow Cabinets of William Hague and Michael Howard before spending his remaining parliamentary years as a backbencher. Prior to entering Parliament, he earned a doctorate at All Souls College, Oxford and served as Director of the Number 10 Policy Unit under Margaret Thatcher.
A veteran Eurosceptic described in 1993 as a pragmatic Thatcherite, Redwood has been particularly known for his work on economic policy and European matters. He co-chaired the Conservative Party's Policy Review Group on Economic Competitiveness until 2010 and serves as Chief Global Strategist of investment management company Charles Stanley & Co Ltd. Redwood was a prominent supporter of Brexit in the 2016 EU referendum and was a member of the pressure group Leave Means Leave. He writes commentary for Comment Central.
