The Treasury is expected to draw up an analysis of the economic benefits of closer relations with the European Union, as Andy Burnham prepares to reopen the debate over Brexit.
Whitehall sources said officials would examine a range of options for the UK’s future relationship with Brussels. The work is intended to “inform the debate” over how far Britain should go in unpicking Brexit, although a Treasury source said the department had not yet been asked to produce the analysis.
The prospect of a new Treasury assessment has prompted warnings from Conservatives that Labour is reviving the tactics used during the 2016 referendum campaign, when ministers issued stark predictions about the economic consequences of leaving the EU.
Former Tory leader Sir Iain Duncan Smith said the initiative “sounds like Project Fear all over again”.
“There is no limit to Burnham’s ambitions when he talks of getting closer to the EU,” he said. “All the nonsense about the UK’s economic performance is without evidence. We have outgrown the EU.”
Shadow chancellor Andrew Griffith accused the Treasury of risking “Project Fear in reverse” as the Prime Minister presses for a closer relationship with Brussels.
In the run-up to the 2016 vote, the Treasury forecast that leaving the EU could cause a “profound shock”, including a deep recession, a fall in house prices of up to 18 per cent and an increase in unemployment of as many as 820,000 people.
A review of those predictions by investment platform AJ Bell found that the Treasury had correctly forecast a fall in the value of the pound, but said neither its short-term “shock” nor “severe shock” scenarios had proved entirely accurate.
Mr Burnham is planning to use a UK-EU summit in Brussels this month to launch what he has described as a “conversation” about Britain’s relationship with the bloc. That comes despite his saying in May that reopening the issue was “the last thing we should do right now”.
The Prime Minister has claimed that a new food and farming agreement with the EU would increase gross domestic product by 0.4 per cent over time, equivalent to £12 billion a year. The Treasury has not yet published the analysis behind that figure, saying it will be released “in due course”.
Bank of England governor Andrew Bailey has also said that closer trading links with Europe could improve UK growth. In an interview with the BBC, he said: “Would the UK being able to trade more openly with its nearest neighbours, to have that trade, to have that market openness, be beneficial for growth in the UK? My view is yes, it would.”
Mr Burnham cited the comments in a separate BBC interview, saying: “The governor of the Bank of England said yesterday that getting closer to Europe again would bring growth. And that is what I’m trying to do.”
Shanker Singham, a former government trade adviser and chairman of The Growth Commission, criticised the proposed reset, saying it was being presented to the public on the basis of “flawed assumptions and bogus calculations”.
