The UK Treasury is set to conduct an analysis examining the potential economic benefits of various options for Britain's future relationship with the European Union. This move, according to Whitehall sources, is intended to "inform the debate" about the extent to which Brexit can be unwound.
However, the initiative has drawn criticism, with opponents suggesting it echoes the "Project Fear" tactics employed during the 2016 EU referendum campaign. Sir Iain Duncan Smith, a former Conservative leader, told the Daily Mail that the plan "sounds like Project Fear all over again" and argued that the UK has "outgrown the EU."
Shadow Chancellor Andrew Griffith also cautioned against the Treasury "giving us Project Fear in reverse." During the 2016 referendum, the Treasury published an analysis predicting a "profound shock" to the UK economy if it voted to leave, including a deep recession, an 18 percent fall in house prices, and up to 820,000 job losses. A subsequent review by AJ Bell found that while the pound's value did fall as predicted, the "shock" scenarios were not entirely accurate.
The renewed focus on EU relations comes as Andy Burnham, a prominent figure, is advocating for a fresh discussion about closer ties, suggesting it could boost economic growth. Burnham plans to initiate this discussion at an upcoming UK-EU summit in Brussels. This push follows recent comments by the Governor of the Bank of England, Andrew Bailey, who stated that increased trade openness with the EU would benefit the UK's growth. Burnham has seized on these remarks to support his argument for a new deal with Brussels.
Prime Minister Rishi Sunak recently claimed a new food and farming deal would increase the UK's GDP by 0.4 percent annually, equivalent to £12 billion. However, the Treasury has not yet published the analysis underpinning this figure, with a spokesperson stating it would be released "in due course."
Critics like Shanker Singham, chairman of The Growth Commission, have voiced skepticism, stating that "this EU reset is being sold to the British people on the back of flawed assumptions and bogus calculations." A Treasury source indicated that the department had not yet been formally requested to draw up a new analysis of potential EU options.