Serpent's Egg

The Eroticism of Fat Men

Leaving EU will halve net migration, boost pay and help to solve housing crisis, study says

EU flag in front of Big Ben
Brexit will halve migration, the report says CREDIT: DANIEL LEAL-OLIVAS /PA

Predictions by the Treasury ahead of the Brexit vote have been brought into question by a study which says that leaving the European Union will halve net migration, give British workers a pay rise and help to solve the housing crisis.

The report from the Centre for Business Research at the University of Cambridge examined the possible future scenarios following the referendum decision to leave the EU.

George Osborne, the former chancellor, was heavily criticised in the run-up to the referendum for a series of bleak Treasury assessmentsabout Britain’s prospects outside the EU, which became known as “project fear”.

We have looked very carefully at what the Treasury has said about this and we find its work very flawed and very partisan

However the academics’ report forecast that if controls on migration from the EU were introduced in the middle of 2019, net migration would fall to around 165,000 from 2020.

The fall would be a 50 per cent drop in net migration – currently running at more than 330,000 a year – but would not deliver the Government’s promise of cutting it to tens of thousands a year.

The report was heavily critical of the Treasury’s forecasts about the prospect of Britain agreeing a new free trade deal after Brexit.

George Osborne 
George Osborne was criticised for a ‘project fear’ campaign CREDIT: JAMES GOURLEY /REX / SHUTTERSTOCK

It said: “There are probably only two practical options. One is a free trade agreement along the lines of the one Canada has just signed or else no agreement on trade in which case you fall back on WTO rules.

“The impact of both of those is pretty uncertain. We have looked very carefully at what the Treasury has said about this and we find its work very flawed and very partisan.”

Average earnings are forecast to rise by more than 2 per cent a year, partly because of lower levels of migration after Brexit.

The report said: “Our equations for earnings suggest that earnings will rise by more than 2 per cent as employment rates reach a peak in 2017 and especially as migration reduces from 2019.”

The report also forecast that house prices will become more affordable for people on lower incomes.

Inflation is forecast to rise to around 3 per cent by the end of 2017. It said: “It will be higher than it has been for some years. The big question is will inflation get out of hand and we don’t think it will.”

The academics said in the report that the Treasury’s forecasts were pessimistic about the prospect of future trade deals after Brexit: “Analysis by HM Treasury of the potential impact of various outcomes for trade outside the EU is examined and found wanting.

“Instead the actual experience of UK export performance is examined for a long period including both pre- and post- accession years. This suggests a more limited impact of EU membership.

“While we include a scenario based on Treasury assumptions, a more realistic, although in our view still pessimistic, scenario assumes half of the trade loss of the Treasury. The results are presented through comparing these scenarios with a pre-referendum forecast.”

Business investment would fall by between 7 per cent and 15 per cent from 2017 due to the uncertainty of Brexit, the report said.

However it said that these falls “are largely due to uncertainty and diminish from 2019 once the UK leaves the EU”.

A HM Treasury spokesman said: “We want the best outcome for Britain.

“That means pursuing a bespoke arrangement, which was not what the Treasury’s pre-referendum analysis was based on.

“This will give British companies the maximum freedom to trade and enables us to decide for ourselves how we control immigration.”

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This entry was posted on January 5, 2017 by and tagged .

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