Brexit Minister Admits Government Doesn't Know What Leaving the EU Will Do to the Economy

The "paradigm shift" of Brexit will render economic forecasts useless, says Secretary of State for Exiting the European Union, David Davis. He admitted the government had not conducted a formal impact assessment on the effect of leaving the European Union.

Appearing before the Commons select committee on leaving the EU, the Brexit secretary said that the "sectoral analyses" his department has released to the committee after pressure from parliament do not amount to quantitative forecasts of the effect of Brexit on the economy, and that no such work has been done.

The admission was described as "strange," "staggering," and "a dereliction of duty" by pro-EU members of the committee.

Parliament passed a motion on November 1 ordering the government to release "impact assessments" arising from its analysis of the effect of Brexit on different sectors. The government has since supplied the Brexit select committee with its analysis.

However, Davis said these documents do not meet the "formal definition" of an impact assessment.

"The government hasn't undertaken any impact assessments of leaving the EU for different sectors of the British economy," Davis said.

David Davis
Britain's Secretary of State for Exiting the European Union, David Davis, arrives in Downing Street in central London, Britain October 9, 2017. Toby Melville/Reuters

Hilary Benn, the committee's Labour chair and a former anti-Brexit campaigner, asked: "Doesn't it strike you as rather strange… that on the most fundamental change facing the country, the government hasn't undertaken any impact assessments at all?"

But Davis said that economic forecasts of the impact of Brexit were of limited use to his department. "I am not a fan of economic models because they have all proven wrong. When you have a paradigm change, as happened in 2008 when you have a financial crisis, all the models were wrong," Davis said.

"In every outcome [of Brexit], whether its a free trade agreement, whether it's a WTO outcome, or whether it's something in between [on that] spectrum, it's a paradigm change."

Davis also confirmed that there had been no quantitative assessment carried out of the impact of leaving the EU's customs union before cabinet took the decision to make that a negotiating objective.

"There's obviously a judgement made on qualitative things, but not a quantitative one," Davis said.

He added that, once Brexit talks progressed to their second stage, which covers trade, his department will "Do the best we can to quantify the effect of different negotiating outcomes" on different sectors of the economy "as we come up to them."

And he said that "contingency planning" was underway over issues such as the future of nuclear regulation in a no-deal scenario.

Labour committee member Seema Malhotra said on Twitter that Davis had "just admitted that the Government have not conducted a single economic impact assessment on the impact to Brexit to our economy. Staggeringly. A dereliction of duty. #brexitshambles"