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Leaked Brexit economic forecasts rekindles old UK debate

[LONDON] The leak of government forecasts on the economic impact of leaving the European Union is giving both sides of the debate a chance to rehash arguments from the 2016 campaign.

The analysis was supposed to be so secret that government ministers weren't going to be allowed to keep their own copies, but BuzzFeed published a report on their contents Monday evening.

Quizzed about it in Parliament, Brexit Minister Steve Baker called it a "selective interpretation of a preliminary analysis." It said that each of the three scenarios modeled, from no trade deal with the EU to membership of the European Economic Area, would bludgeon growth. The hardest Brexit would leave the economy 8 per cent smaller than otherwise in 15 years time, and the softest would still slow growth by 2 per cent.

This will be familiar to anyone who followed the heated discussion around Brexit ahead of the referendum. Back then, the Treasury published forecasts for the same scenarios, as part of what supporters of leaving the EU dubbed "Project Fear". The new numbers are a little better than those, partly because they include the possibility of a trade deal with the US.

Former Pensions Secretary Iain Duncan Smith, a leading Brexit backer, urged people to ignore the new forecasts, telling the BBC that the document had been "deliberately leaked because it gives a bad view." He pointed out that previous forecasts had turned out to be wrong.

"It is not yet anywhere near being approved by ministers," Mr Baker told lawmakers, adding that the document "requires significant further work" and "it does not yet cover our desired outcome." But Rupert Harrison, a former Treasury special adviser who is now a portfolio manager at Blackrock Inc, said these were the sorts of forecasts he would have expected.

"As any economist will tell you its basically impossible to come up with any other conclusion based on standard trade impacts," he wrote on Twitter. "To the extent there are any valid arguments for Brexit they are almost all non-economic."

The leak goes to the heart of the debate within government at the moment, between those who support maximum distance from the EU, and those who want to stay close. It also comes at a time when talk of a second referendum is in the air - even if the prospects of another plebiscite are still remote.

Supporters of a cleaner break argue that Britain's trade opportunities lie beyond Europe, while their opponents say it will be difficult for deals further afield to offset the damage done to a large trading partner that's close by.

A government official said the BuzzFeed report was based on an early draft of the forecasts, which didn't include the government's desired outcome of Brexit negotiations - what Prime Minister Theresa May calls a "deep and special partnership."


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