Cabinet split over no-deal Brexit reopens after Liam Fox calls Philip Hammond's forecasts 'hard to swallow'
Chancellor's department predicts there could be an extra £80bn a year in borrowing if Britain exits EU without an agreement
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Your support makes all the difference.Liam Fox has said he finds the Treasury’s predictions of economic turmoil following a no-deal Brexit “hard to swallow”.
The international trade secretary’s intervention underlines deep divisions in the cabinet over the government’s approach to Brexit, with the forecasts only recently promoted by Philip Hammond.
The chancellor said his department’s best estimates were that a no-deal Brexit would lead to £80bn a year in extra borrowing, sparking fury among Brexiteers who believe leaving without an agreement would be preferable to Ms May’s Chequers proposals.
The disagreement has surfaced as a new plot emerged to torpedo the PM’s plans, involving Tory election guru and Boris Johnson ally Sir Lynton Crosby.
Speaking to the BBC’s Andrew Marr show, Mr Fox said: “Can you think back, in all your time in politics, where the Treasury have made predictions that were correct 15 years out? I can’t.
“They didn’t predict the financial crisis that happened. No one could.
“So this idea that we can predict what our borrowing would be 15 years in advance is just a bit hard to swallow.”
Mr Hammond wrote a letter suggesting that under a no-deal scenario GDP would be up to 10 per cent lower after 15 years, compared to the UK staying in the EU, with extra borrowing rising £80bn annually.
His forecast led Eurosceptics to accuse the chancellor of being needlessly gloomy, with Brexiteers particularly enraged because the letter was released just as Brexit secretary Dominic Raab published a series of documents aimed at showing the UK is adequately prepared for a no-deal outcome.
Ms May was also pushed to point out that the Treasury figures are a “work in progress” and suggested they could be changed, though Mr Hammond has said they will only be refined.
The chancellor clearly said that even if there is “refinement”, then “we expect the analysis to show that for scenarios in which we have higher barriers to trade with the EU there will be a more damaging effect on the economy and public finances”.
Sir Lynton is said to have ordered allies to work with former minister Steve Baker and other hardline Brexiteers in the European Research Group of Tory MPs – chaired by Jacob Rees-Mogg – to bring down Ms May’s Chequers proposal, something that could well lead to her fall.
One potential plan is to revive the campaign group Change Britain, which some see as a possible platform for a Boris Johnson leadership campaign.
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