‘Doomsday’ list of tariff cuts to boost economy in case of a ‘no deal’
‘Doomsday’ list of tax and tariff cuts dubbed ‘Project After’ is prepared by ministers to boost the economy in case of No Deal Brexit
- Civil servants are preparing a ‘Doomsday list of economic levers’ for economy
- Warnings of worst year since the financial crash after ‘fog’ of Brexit confusion
- However, the UK economy is still set to outpace Germany this year
Civil servants are preparing a ‘Doomsday list’ of radical tax and tariff cuts amid warnings the economy faces its worst year since the financial crash.
The plans, dubbed ‘Project After’, are being drawn up to minimise the shock of a No Deal Brexit in March.
One Whitehall source called the project, marshalled by Cabinet Secretary Mark Sedwill, a ‘Doomsday list of economic levers’ that the Government could pull to stimulate the economy. News of the plan emerged as Bank of England Governor Mark Carney warned a ‘fog’ of confusion had descended on the country amid failure to agree a Brexit deal with Brussels.
He said the Bank now expects the UK economy to expand by just 1.2 per cent in 2019 – its most sluggish performance since the depths of the recession in 2009 – even if a deal is clinched in the next few weeks. Making its previous forecast in November, the Bank said it expected growth of 1.7 per cent this year.
The governor of the Bank of England, Mark Carney, gives warnings over economic ‘fog’
The Bank said it saw a one-in-four chance of the economy slipping into recession in the second half of this year.
However, the European Commission also slashed its growth forecasts for the eurozone yesterday, with the economies of Germany, France and Italy all faltering.
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Former Conservative leader Sir John Major attacks Government over Brexit:
Sir John Major has rounded on the Government over Brexit – describing it as a policy of national ‘self-harm’.
The former Tory prime minister used a speech in Newcastle yesterday to step up his attacks on leaving the EU, adding that it would deliver ‘far worse times’ for the UK.
‘It is the first time in our long history that any British Government has embraced a policy of self-harm, despite their own advisers warning that it will make our nation weaker – and our people poorer,’ he said. But Sir John also attacked the Government’s record on inequality, saying the growing use of food banks was an indictment of society. ‘It cannot be right that, in the fifth or sixth richest nation in the world, food banks have become essential in the lives of so many people,’ he said.
‘And poverty amid plenty is corrosive. It alienates and breeds resentment.
‘The human spirit can endure great hardship, but inequality gives it a bitter edge,’ he added. ‘I entered No 10, 29 years ago with an ambition to build a country ‘at ease with itself’. I failed.’
As a result, the UK economy is still set to outpace Germany this year, despite an expected slowdown.
Last night the Financial Times said ‘Project After’ was designed to minimise the impact of a No Deal departure. It reportedly involves senior figures from the Cabinet Office, the Treasury, the business and international trade departments, in close contact with the Bank of England. Although the project has been mentioned at Cabinet, its existence had not been made public.
In a briefing yesterday, Mr Carney warned consumer confidence, business investment and household spending all look weaker than predicted.
He said: ‘That fog of Brexit is causing short-term volatility in the economic data and, more fundamentally, it’s creating a series of tensions.
‘Although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a No Deal, no-transition exit.’
Mr Carney also joked that his job is disturbing his sleep. Asked if he ever wakes up and regrets still being Governor, he replied: ‘Wake up in the morning? I wake up in the middle of the night.’
The gloomy predictions were announced by the Bank’s powerful Monetary Policy Committee as it unveiled a unanimous decision to hold interest rates at 0.75 per cent.
There have been dark clouds over the Bank of England as civil servants prepare for post-Brexit levies and tax cuts
Business investment is expected to shrink by 2.75 per cent, while household investment is also expected to fall.
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