Yesterday, the Chancellor of the Exchequer gave the first Autumn Statement since the UK’s vote to leave the EU.
The Autumn statement has revealed the very beginnings of the devastating impact withdrawing from the EU single market will have on the economy. Economic growth will be slower, there will be higher inflation, higher borrowing, and higher debt.
The Office for Budget Responsibility (OBR) has predicted that Brexit could hit public finances by £58.7 billion. The OBR has further forecast a fall in GDP growth by 2.4% due to the uncertainty created by Brexit. Inflation is predicted be 2.8% in 2018, which will cause the cost of basic goods to rise.
While the Chancellor made several positive announcements, including a rise in the National Living Wage to £7.50 per hour and a cancellation in the planned fuel duty rise, the measures introduced in the wake of Brexit are completely insufficient.
Years of Tory austerity since 2010 have decimated the UK economy- UK GDP is close to 20% lower than it would have been if the UK had achieved a paltry 2% growth rate since 2008. Wage growth has been weak due to low productivity, and the OBR has predicted that wages will not return to their 2009 level until 2021.
On top of the difficulties created by Tory austerity, the prospect of Scotland being forced out of the EU single market against its sovereign will has the potential to further harm the economy.
Membership of the single market contributes £11.6 billion to the Scottish economy. The independent Fraser of Allander Institute has predicted that a hard Tory Brexit threatens to cost 80,000 Scottish jobs, and cost Scotland’s economy up to £11 billion a year by 2030.
These figures, however, are based upon what we currently know about Brexit, which is still very little. The Chancellor and the UK Government have failed to define exactly what Brexit means, more than 5 months after the referendum.
The Prime Minister, Theresa May, has stated that she will not provide a “running commentary” on the Brexit negotiations. However, the utter lack of information provided by the UK Government on what Brexit actually entails will only serve to create further uncertainty.
