The stark cost of Brexit was laid bare today as it emerged that Britain’s finances will plunge by £59bn – with a large chunk of lost income from fewer migrants.
The UK will have to borrow a whopping £16bn extra to make up for lower migration in the wake of the EU vote, the Office for Budget Responsibility watchdog revealed.
The bill will be even bigger if Theresa May manages to hit her target of cutting immigration below 100,000.
Chancellor Philip Hammond unveiled his Autumn Statement with a new £23bn ‘productivity’ fund for housing and road building, and claimed he would make Britain more ‘resilient’.
But the OBR worked out that the economy would be £122bn worse off by 2020, compared with George Osborne’s previous estimates only 8 months ago.
Lower growth, higher inflation and a weak pound - all caused by business uncertainty after the Brexit vote - have created a £58.7bn hit to the public finances, the watchdog said.
In contrast to the £350m extra a week that the Vote Leave camp claimed in the EU referendum, the figures mean Britain is borrowing a cool £234m every week as the price of Brexit over five years.
The OBR said the referendum result meant potential growth in the current Parliament would be 2.4 % lower than forecast in March.
Lib Dem MP Norman Lamb told HuffPost UK: “The OBR has set out in black and white the facts that Boris and other Vote Leave leaders can’t bring themselves to hear – immigration is good for our economy, and hard Brexit will make our country worse off.
“This just underlines the fact that Britain after Brexit must remain open to talent from around the world, and stay an integral member of the Single Market.”
Labour MP Pat McFadden, of the Open Britain campaign which campaigns for a ‘soft’ Brexit, said: “Today, for the first time, there was an official cost placed next to the referendum outcome.
“The eye-watering £58.7 billion Brexit borrowing bill means less money for public services, not more as we were promised.”
Former Cabinet Minister and lead Brexiteer Iain Duncan Smith told the BBC that OBR forecasts had been badly wrong in the past and that he was confident that “the British people will go about their business” and the economic situation would get better.
The OBR based its forecasts on the assumption that the UK would quit the EU in April 2019 - two years after Theresa May’s deadline for triggering negotiations with the formal Article 50 process for Brexit.
“The referendum result and forthcoming post-Article 50 negotiations have generated uncertainty for firms that will lead to some investment being postponed or cancelled,” it says in a startling assessment.
The watchdog assumes that after Brexit, May will “adopt a tighter migration regime than that currently in place, but not sufficiently tight to reduce net inward migration to the desired ‘tens of thousands’.”
It has assumed that migration will fall by 80,000 a year.
“Exiting the EU will be associated with lower net migration than would otherwise have been the case. In addition, pull factors attracting migrants to the UK may be less powerful than previously.”
It warns that if Britain had voted to Remain in the EU, migration would have surged, creating more income for the economy from tax receipts.
The OBR even said that its figures could be even worse if there is a “bumpy Brexit” under which “firms shed jobs more aggressively or that consumers increase precautionary saving, both of which are downside risks”.