Both the British Government and the European Union insist that they do not want a “no-deal” Brexit. Yet it remains a possibility - and one which must be prepared for.
That is why the Centre for Policy Studies has published this report, a major paper setting out the measures the Chancellor should consider in a no-deal scenario, designed to complement the Treasury’s own contingency planning.
'A Budget for No Deal' argues that the Government’s main priority, if a deal cannot be reached, should be to avoid the shock and disruption of no deal translating into a general crisis of confidence.
While the Bank of England will doubtless have a role to play via monetary policy, the report suggests there would also be scope for a limited fiscal stimulus - worth up to £44 billion, or approximately 2% of GDP.
This should be used to do three things above all:
- Put more money in consumers' pockets
- Incentivise business investment, and in particular help small and family businesss
- Keep Britain open to trade and talent
This agenda would not only respond to the immediate challenges posed by a no-deal Brexit, but support the British economy in the longer term - echoing polling cited by the paper which shows that the public overwhelmingly want Britain post-Brexit to be the most business-friendly and lowest-tax country in Europe, whatever the form of Brexit.
'A Budget for No Deal' can be read in full here.