Jacob Rees-Mogg’s ideas for the economy would leave us with a Del Boy Brexit

Jacob Rees-Mogg is taking charge of “Project Hope”, the counterpart to the “Project Fear” that Brexiteers often deride. It is an ambitious project, with some awesome claims attached to it.

Economists often toss gigantic sums of money around as casually as they might chuck their socks into the laundry basket. According to Jacob Rees-Mogg, quoting the pro-Brexit group Economists for Free Trade, the UK economy could enjoy a booty of some £1.1 trillion from a WTO option Brexit (the so-called no-deal scenario). For context, this is about two thirds of the entire national income for a year, some £1,100bn, or – deep breath – £1,100,000,000,000.

It is plausible, if you make certain assumptions. If Britain really became a truly “free trade” economy – at least for imports – then common sense tells us that the country could “shop around” abroad for the cheapest sources of everything from chickens to PCs.

Britain would be like a national version of Aldi or Lidl, buying up bargains from around the world, taking advantage, Del Boy-style, of the value on offer.

Sometimes, the cheapest places to find goods and services will be in the EU; but in many cases that is unlikely to be the case, and increasingly so as the EU, especially the “old” Europe of the south and west, loses more of its competitive advantage to the likes of China and India. We will, say, be buying more Volvo cars made in China, as we already are in fact. Nothing hooky or shoddy about that.

Overall, the cost of living would probably come down over time. If you believe that the consumer interest matters, then the effect on prices will be to boost people’s standard of living, as their pounds will go further (though that effect may be partially offset if sterling has to take a fall to improve competitiveness, post-Brexit).

If, in other words, you manage to keep your job or are already wealthy, then you could quite conceivably be better off.

Second, Rees-Mogg claims that trade with fast growing economies in emerging markets – which he knows well as an investment expert – will expand faster than with the EU (from a low base). Again, this has some credibility, but the size of UK trade with such economies is usually dwarfed by trade with our near and prosperous EU partners. So it would need a really rapid shift in exports to facilitate that kind of transformation. It could take many decades to come through.

I am not sure, though, that Rees-Mogg and his experts have sufficiently allowed for the damage to the “producer interest” in the UK. Everyone from Welsh fishermen and women exporting lobsters to the restaurants of Brussels, to Geordies making Nissan Qashqais to be sold in Poland or Greece, will find their livelihoods in jeopardy as Brexit adds complexity and cost to supply lines.

It is foolish to deny that, or pretend it will go away. It will not.

The UK economy will require a very painful adjustment. The question is whether the many thousands, if not millions of jobs that will be lost are worth any longer term benefit. The short term costs will be felt too in homelessness, crime, family breakdowns and the usual litany of social ills that overtake depressed areas. Perhaps wages can be adjusted down to help keep businesses going, but it might need to be a substantial cut; in which case the bonus of lower prices will be much less relevant if wages fall by even more. This has, after all, been the pattern of globalisation.

The most damning criticism of the Rees-Mogg project, though, is that there is nothing stopping us exporting to China right now – and the Germans, as ever, show us how it can be done. Any free trade deal with China, say, that might give us an advantage would be resisted by the EU, a much bigger partner for China, and we’d be obliged to give China certain trade advantages – thereby losing our ability to become a free trade, tariff-free beacon for the rest of the world. WTO rules forbid such preferential arrangements: there are many trade-offs in trade.

So that great big figure of £1.1 trillion – let us say £37,000 for each and every of the roughly 30 million UK households – needs to be subjected to some heavy caveating.

First, it will materialise, if at all, over many, many years – and the longer the time horizon, the more uncertainly so.

Second, as is so often said about Project Fear, economic forecasting is an unsure business. All sorts of assumptions about the economy can go wrong. For one thing, if the supply of labour from the EU is reduced, and not compensated for from elsewhere in the world, under the government's migration target of 100,000 per annum, what effect will that have on growth? What will trends in productivity look like when investment is already depressed? What will happen to the public finances under the pressure of Brexit? And the exchange rate?

And – most of all – what if Donald Trump provokes a global trade war?

Third, in particular, we cannot know what will happen to new dynamic trading partners. Right now, the boom in emerging markets is subsiding, and they tend to be more volatile. Much the same goes for their underlying economies. In other words, how do we know that the economies of China, South Korea, India, Indonesia, Vietnam, parts of Africa and Brazil will grow as fast as they have, variously, sometimes in the past? There is no God given law about that.

In an odd echo, the UK actually joined the then-European Economic Community in 1973, just at the moment when their long run of post-war, economically miraculous high growth was coming to an end and turning into recession. Timing has not always been a great British virtue.

Right now the truth is that the costs posited under Project Fear are more immediate and concrete than the benefits – no doubt there in principle – pointed to by Rees-Mogg’s Project Hope.

You have to have quite a nerve, or “belief in Britain”, to buy the Rees-Mogg future.