UK think tank: Brexit will lead to net loss for public finances

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According to the independent research institute’s head, the decision of Britain to withdraw from the European Union will possibly lead to a net fiscal loss for the public finances of the U.K. government.

In a note to the Times of London newspaper that was published on Tuesday, the Institute for Fiscal Studies’ deputy director, Carl Emmerson stated: “The forecast health of the public finances was downgraded by £15 billion ($20.25 billion) per year — or almost £300 million per week — as a direct result of the Brexit vote.”

“We are likely to make a net fiscal loss from it. Those are the numbers and forecasts which the government has adopted.”

The letter of Emmerson was a response to an article written by Boris Johnson, the U.K. Foreign Secretary, at the weekend, which reiterated the widely discredited and false claim that withdrawing from the European Union would free £350 million of spending per week

During the referendum on membership of the European Union in 2016, the £350 million claim was extensively used by the Brexit campaign. However, the numbers do not take into account the rebate that the United Kingdom receives, which instantly discounts the United Kingdom’s membership fee to around £250 million per week.

According to Full Fact, the independent fact-checking charity, this £250 million is further reduced by payments from the European to U.K. agriculture and poorer regions including Cornwall and Wales. The EU also makes further payments to the public sector of the United Kingdom, such as research grants.

“In 2014, these were worth an estimated £1 billion, so including them could reduce our net contribution further still,” said the Full Fact team on its website.

“The money we get back will be spent on things the government may or may not choose to fund if we left the EU. It’s not enough to look at the net contribution in isolation because what we get back isn’t fully under our control.”

Emmerson stated that the budget forecasts of the U.K. government include an allowance of £250 million per week, not £350 million, from withdrawing from the EU.

“(This is) funding that could in principle go to the National Health Service rather than the EU. But this would involve no state support for any other activities, such as subsidies for agriculture that are at present funded in the U.K. by the EU,” said Emmerson.

“It is perhaps surprising that members of the government are suggesting rather different figures.”

Brexit Support

On the other hand, if the nation is able to acquire advantageous trade deals with the European Union and other countries, the financial position of the United Kingdom could be very different after Brexit.The author of new book “Clean Brexit”, Liam Halligan, says that the United Kingdom does not and should not be required to pay to access the single market of the European Union

On Tuesday, Halligan said: “We sell more to the EU than they sell to us. If there’s any payment for access, it should be in the other direction if we’re being pedantic about it.”

“At the outset, there will be uncertainty about Brexit, of course, there will, but I don’t think for a minute that being outside the EU necessarily means that our growth trajectory will be lower. I actually think our growth trajectory will be higher.”