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Monday 18 June 2018

Remainer economists are wrong, there will be a Brexit dividend, and it goes way beyond savings from discontinuing payments to the EU budget.

Today’s front pages are dominated by the government’s announcement it will plunge £20bn into the NHS – more precisely a year-on-year rise of 3% above inflation. The government has already pointed to departure from the EU as one source of the windfall, but the prime minister will also reveal at a speech today that a fixed tax threshold will help to cover the rest – As pay rises over time, lower incomes move into the higher brackets, meaning more revenue for the government.

Unsurprisingly, Remainers argue the latter will be covering most of the cost, and it won’t be enough. Former Treasury officials, along with establishment champion, the Institute for Fiscal Studies say the downturn brought about by leaving the single market will wipe out any benefits gained from no longer having to pay into Brussels’ coffers. Conveniently, the British Chamber of Commerce claims this morning 2018 will see the lowest economic growth since 2009, the peak year of the financial crisis.

Well, we all know how accurate forecasts are. During the Referendum The IFS was almost as guilty as the unashamedly anti-Brexit Treasury, whose ex-officials’ views are steered by political motives, not economic reality.

There’s no doubt, leaving the EU will bring its consequences. Our mission would not have been worth the hype otherwise, but we need to take a longer-term view. Just as Britain’s membership of the Common Market accounts for a fraction of our history, so will this period of adaption, only even more minuscule. Let us not forget, ours is a services-based economy with a global focus – the EU’s fragmented “Single” Market barely exists for services. Our relationship with the EU is import driven, which is why the threat of a no-deal is such a huge weapon.

According to PWC, by 2050 the EU27 will account for just 9% of global GDP compared to today’s 22%. That’s is partly because Britain will have left – even Remainers would not dispute continued access to our own market – but mainly because the EU accounts for a minute share of the global population. Yes, this is another forecast, but no one denies Asia will catch-up in a big way, and the dynamic US economy will keep up (see below).

Trade deals beckon, and even if future British governments fail to secure those, just as they are messing up withdrawal, the fact of the matter is, we have a relatively weak relationship with our European neighbours today, inevitably as technological change accelerates and the world becomes ever smaller, the idea of regional relationships, both commercial and strategic, will become as antiquated as Remainers’ smug views of the nation state. Try telling that to football fans who have remortgaged their homes to travel to Russia for the World Cup.

The EU Withdrawal Bill returns to the House of Lords today after all fifteen of its amendments were rejected in the Commons last week. Lord Hailsham is poised to essentially re-table the meaningful vote amendment, the centrepiece of last week’s battle between Tory Brexiteers and Remainers with Downing Street clumsily caught in the middle.

After Hailsham’s ally in the Commons, Dominic Grieve claimed last week the government had gone back on its promises over a meaningful vote, the peer elected to reinsert the amendment via the upper house. Remainer Tory MPs had been agitating for assurances that there will not under any circumstances be a no-deal.

The amendment will inevitably pass through the House before meeting the acid test in the Commons. Hopefully, the Tory whips will have done their job and picked off enough traitors to chuck out the amendment like last time.

Proceedings begin at 3pm. At 4pm in the Commons, MPs will be debating the abolition of the Lords. There’s a tidy piece in the Yorkshire Post today, pointing out a staggering 54% of peers live in London and the South East.

Finally, the European Commission is buttressing Remainer efforts at home to rule out a no-deal. According to the Times, Michel Barnier has banned aviation regulators from preparing contingencies. Existing air travel functions under EU-led agreements and legal frameworks. They can be easily copied and pasted into a straightforward air travel treaty, and inevitably if we were to call off negotiations with Brussels that is what would happen. Nevertheless, it gives Remainers more firepower in their endless, and equally ludicrous claims Britain cannot survive without the EU. We’ll see about that in 2050.