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TSC's Morgan hits back at Hammond over Treasury Brexit analysis

Treasury Select Committee chair Nicky Morgan has hit out at chancellor Philip Hammond after The Treasury failed to provide further clarity over its Brexit impact assessments.

TSC's Morgan hits back at Hammond over Treasury Brexit analysis

Treasury Select Committee (TSC) chair Nicky Morgan has criticised chancellor Philip Hammond after he failed to provide further clarity on the Treasury's economic modelling for Brexit.

This morning the TSC published Hammond's response to its original calls for further clarity, following its report last year. But Morgan (pictured) said that Hammond has 'shed no more light' on the matter.

'The [TSC's] report expressed disappointment that the government modelled its white paper, which represents the most optimistic reading of the political declaration, rather than a more realistic scenario,' she said.

'The report also expressed the committee’s disappointment that the government did not analyse the backstop and failed to include short-term analysis of any of the modelled Brexit scenarios.'

'The chancellor’s response to our report has shed no more light on these issues. When MPs do eventually come to vote on the withdrawal agreement next week, we will be doing so without all the facts.'

Hammond responded to calls for further information on 3 January, saying that the Treasury's impact assessment model was 'not well suited to analysis of short-term developments.'

'The economic model used by the cross-government group to assess the economic effects of different EU exit scenarios is not well suited to analysis of short-term developments,' he said.

'However, the Bank of England published analysis on 28 November at the request of the committee which assessed how EU exit could affect the UK economy over a five-year horizon.'

In its report last year, Morgan's committee hit out at the Treasury's failure to produce 'short-term' analysis of the economic outcomes of various Brexit scenarios, including a no-deal situation. 

'After an extensive exchange of letters and with discussion at various oral evidence sessions, the committee expresses its disappointment that the Treasury did not provide all evidence that the committee requested,' the committee said at the time.

'The Treasury did not produce short-term analysis of any scenarios. The committee is also disappointed that the Treasury modelled scenarios that have been rejected by the EU (i.e. Chequers) yet did not model scenarios that are considered probable and have the potential to be persistent over the medium to long term (i.e. the backstop).'

'And while the Office for Budget Responsibility now undertakes this sort of short-term analysis for the Budget and other fiscal events, the OBR can only forecast based on stated government policy; the political declaration is only a statement of intent. Therefore, there is no short-term analysis of the deal upon which parliament will vote.'

MPs will hold a 'meaningful vote' on Theresa May's withdrawal agreement next week. 

At the end of last year Morgan told New Model Adviser® in a video that the Financial Conduct's Authority's efforts to contribute constructively to the Brexit process had been 'frustrated by European regulators.'

Watch our video with Morgan here.

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