- Leave campaigners have claimed there will be a huge “Brexit dividend” from leaving the EU.
- Ministers have been asked by journalists what they plan to spend this money on.
- However, official forecasts suggest the government will be billions of pounds out of pocket after Brexit.
LONDON – If you’ve followed the news this week you will probably have come across the phrase “Brexit dividend.”
The idea that Britain is due to receive a huge financial windfall from leaving the EU first began during the referendum campaign when Boris Johnson and others claimed that Brexit would hand Britain an extra £35o million a week for the NHS.
This idea rose to prominence again this week as Johnson called on the prime minister to spend an additional £5bn on the health service once we stop paying membership fees into the EU.
The debate culminated this morning when the International Trade Secretary Liam Fox was asked repeatedly on BBC Radio 4’s Today programme about what this dividend would be spent on once it arrived.
There’s only one real problem with all this. The Brexit dividend has never existed and probably never will.
‘£350m a week for the NHS’
The Leave campaign’s claim that there would be an additional £350 million extra a week spent on the NHS after Brexit has since been widely discredited, most notably by the official statistics watchdog which reprimanded Johnson for repeating it.
As the watchdog pointed out, the figure failed to take into account the amount that Britain gets back from the EU in terms of the rebate and in terms of EU spending, nor whether Britain will continue to pay into the EU after we leave.
Brexit will decrease money available to the government
Yet even if we accept the £350 million claim in full, it would still not amount to a dividend once you take into account what Britain is set to lose from Brexit.
As the government’s own independent spending watchdog the Office for Budget Responsibility has made clear, the economic hit from leaving the EU, the single market and the customs union, will lead to the government having less money to spend overall, rather than more.
In fact, in November 2016 they estimated that May’s government would need to borrow an additional £15bn every year by the end of the decade, purely because of the economic impact of Brexit.
This easily exceeds even the most optimistic claims about the size of any “dividend” we will receive from leaving the EU.
Of course, it’s theoretically possible that Brexit will somehow unexpectedly produce a sudden and significant boost to the economy that will disprove all of the forecasts which suggest otherwise.
But that’s all the Brexit dividend is – a theory. It is not something that actually exists in the real world. The BBC and others should stop pretending otherwise.
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