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Select committee inquiry

The UK's economic relationship with the European Union inquiry

Closed

Treasury Committee · Opened 11 October 2017 · Closed 11 October 2017

1 recommendation · 9 conclusions
Inquiry on parliament.uk ↗

What the inquiry looked at

“The Treasury Committee has launched an inquiry into the UK's economic relationship with the EU. The inquiry will consider, among other things, transitional arrangements, preparedness for 'no deal', and the long-term economic relationship.”

The committee's words, from the inquiry page on parliament.uk ↗.

What the government said

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

No government response is linked to this report.

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4th Report - Transitional arrangements for exiting the European Union

No government response is linked to this report.

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How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 11 October 2017 to 19 March 2019.

  1. Oral evidence 13 sessions
  2. Report 2 reports
  3. Correspondence 17 letters

What it recommended 1 recommendation · 9 conclusions

1After an extensive exchange of letters and with discussion at various oral evidence sessions, the...

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
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 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.
2Notwithstanding this objection, the Committee is grateful that all institutions responded to the request in...

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
Notwithstanding this objection, the Committee is grateful that all institutions responded to the request in good time to enable the challenging programme of scrutiny and to allow a report to be produced ahead of the “meaningful vote”.
3CGE models are widely employed in economic analysis of international trade.

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
CGE models are widely employed in economic analysis of international trade. The Government’s model has the advantage of analysing decisions about trade at a significant level of sectoral detail. It also analyses the economy in the long term only, assuming there is full employment of capital and labour. As such, it does not show how the economy will transition to the new trading relationship, the path taken by inflation and unemployment, and whether the transition could result in increased structural unemployment.
4The White Paper scenario represents the most optimistic and generous reading of the Political Declaration,...

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
The White Paper scenario represents the most optimistic and generous reading of the Political Declaration, insofar as it is consistent with it at all. It certainly does not represent the central or most likely outcome under the Political Declaration, and therefore cannot be used to inform Parliament’s meaningful vote on the Withdrawal Agreement.
5Parliament may prefer to draw from the range of the scenarios in the Government analysis,...

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
Parliament may prefer to draw from the range of the scenarios in the Government analysis, additionally informed by external analysis and comment, in order to assess the economic impact of the Withdrawal Agreement.
6Trade agreements can take four years to agree, and previous EU negotiations, have taken longer.

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Recommended (the committee's words)
Trade agreements can take four years to agree, and previous EU negotiations, have taken longer. The CETA deal took over eight. Therefore, the Committee believes it is feasible that the UK could enter the Backstop, despite it being neither the UK’s nor the EU’s preferred position. And it believes that the Government should have modelled the Backstop, making some broad-brush assumptions.
7The Government has provided long-term regional and sectoral analysis of a number of EU exit...

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
The Government has provided long-term regional and sectoral analysis of a number of EU exit scenarios. However, the Committee notes that it did not include analysis Twenty-Fifth Report 45 of the Backstop nor did the Committee receive short-term regional and sectoral analysis showing where losses and gains in jobs are most likely to be located as the economy adjusts to a new trading relationship.
8It is worth emphasising that the Treasury analysis makes no allowance for any other dynamic,...

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
It is worth emphasising that the Treasury analysis makes no allowance for any other dynamic, domestic policy responses, such as policies developed under the Industrial Strategy, that could affect the impacts of the EU Exit scenarios on regional and sectoral growth.
9The Committee finds it hard to fathom why the traders who currently trade only with...

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
The Committee finds it hard to fathom why the traders who currently trade only with the EU were not written to long before this time. And it is of the view that these and other preparations should have started sooner.
10The Committee notes that the Government’s economic analysis does not include any fiscal policies that...

25th Report - The UK’s economic relationship with the European Union: The Government’s and Bank of England’s Withdrawal Agreement analyses

Concluded (the committee's words)
The Committee notes that the Government’s economic analysis does not include any fiscal policies that would be required in response in any scenario. The Chancellor told the Committee it would be implausible for the Government not to respond in a No Deal scenario with automatic stabilisers and additional discretionary fiscal fire power. The debt-to-GDP figures in the Government’s No Deal scenario therefore cannot be quantified.

Evidence

Oral evidence sessions 13

Correspondence 17 letters