A year on from the publication of HM Treasury’s first report into the impact of leaving the EU, new analysis by Change Britain shows that just 1 in 10 of the warnings made by the Remain campaign before last year’s EU referendum can be determined to be true. By contrast, three quarters of the claims can be dubbed ‘false’ or ‘likely false’, with the remaining being, at best, only partially true.

Claims that can be clearly stated to be false include:

  • ‘A vote to leave would cause an immediate and profound economic shock… the economy would fall into recession with four quarters of negative growth’

  • ‘Businesses and households would respond to this by putting off spending decisions’

  • ‘Unemployment would increase by around 500,000, with all regions experiencing a rise in the number of people out of work’

  • ‘Many of our trading partners, including the United States, are already negotiating with the EU. Before they start negotiations with the UK they are likely to want those deals to conclude’

 

Type of claim

Number

Percentage

True

2

10%

Only partially true

3

16%

Likely false

7

37%

False

7

37%

 

Commenting, Change Britain Chair Gisela Stuart said:

‘The Remain campaign fed the public with stories of doom and gloom, but this analysis shows why voters were right to see through their scaremongering.

‘Growth continues to be upgraded, employment is at a record high and a number of multinational businesses have made major investment announcements into the UK.

‘The British people had the confidence to reject Project Fear and back Project Hope. Outside the EU, we can begin a process of national renewal and look forward to a strong and flexible economy which benefits everyone across the UK.’

Notes to Editors

This note is based on the White Papers that were produced by the previous Government in the run-up to the EU referendum (HM Government, link). There are many different organisations that were involved in ‘Project Fear’ during the EU referendum, including the previous Government, the official ‘remain’ campaign – ‘Britain Stronger In Europe’ and many other smaller campaigns such as the Liberal Democrats, ‘In Facts’ and many more. However, this note looks at four of the papers which made detailed, specific warnings about what would happen if the UK voted to leave on 23 June 2016:

  • The process for withdrawing from the European Union, February 2016, link

  • Alternatives to membership: possible models for the United Kingdom outside the European Union, March 2016, link

  • HM Treasury analysis: The long-term economic impact of EU membership and the alternatives, April 2016, link

  • HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link

There are some claims made in these papers which it is currently impossible to assess, such as the claim that ‘gross domestic product (GDP) would be £4,300 lower in 2015 terms for each household after 15 years and every year thereafter’ (HM Government, May 2016, link). Long term future projections are therefore not considered in this paper, however if the signs suggest that there has been some progress towards what the previous Government warned, then the claim is marked as ‘only partially true’. If the signs are that things have developed differently to what they claimed, the assertion is marked as ‘likely false’. Often the same claim is made multiple times in different wording. When this occurs we take the most explicit statement.

Previous Government claim

Reality

True or False?

Source

Warnings about the negotiations

1

‘If the British people vote to leave, there is only one way to bring that about, namely to trigger Article 50 of the Treaties and begin the process of exit, and the British people would rightly expect that to start straight away’

There were nine months between the vote to leave and the triggering of Article 50. This gave important time for HM Government to develop its negotiating position.

False

The process for withdrawing from the European Union, February 2016, link; HM Government, March 2017, link

2

‘If the UK was to reach the end of the two year period specified by Article 50 without having reached an agreement, and if any of the 27 other Member States vetoed an extension of this period, this would lead to the UK leaving the EU with no immediate replacement agreed, without any protection under EU law for the rights of UK business to trade on a preferential basis with Europe’

The current Government has acknowledged that the UK could leave without a deal, but has stated that ‘no deal is better than a bad deal’

True

The process for withdrawing from the European Union, February 2016, link; HM Government, January 2017, link

3

‘Significant access to the Single Market… would require the UK to accept the free movement of people’

The current Prime Minister has confirmed that ‘we do not seek membership of the single market. Instead we seek the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement’ and has stated that this is compatible with ‘control of immigration’. It should be noted that Canada recently struck a trade deal with the EU that removed 99% of tariffs but didn’t require free movement.

Likely false

HM Treasury analysis: The long-term economic impact of EU membership and the alternatives, April 2016, link; HM Government, January 2017, link; Chatham House, March 2016, link

4

‘There is no guarantee that we could fully replicate our existing cooperation in other areas, such as cross-border action against criminals’

While there is no guarantee, the Government has stated that ‘After Brexit, Britain wants to be a good friend and neighbour in every way, and that includes defending the safety and security of all of our citizens.’ The EU’s chief negotiator has also expressed his desire for security cooperation.

Only partially true

Alternatives to membership: possible models for the United Kingdom outside the European Union, March 2016, link; HM Government, January 2017, link; Politico, March 2017, link

5

‘Significant access to the Single Market… would require the UK to… continue to make financial contributions to the EU’

The current Prime Minister has confirmed that ‘we do not seek membership of the single market. Instead we seek the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement’ and has stated ‘because we will no longer be members of the single market, we will not be required to contribute huge sums to the EU budget. There may be some specific European programmes in which we might want to participate.’

Only partially true

Alternatives to membership: possible models for the United Kingdom outside the European Union, March 2016, link; HM Government, January 2017, link

6

‘[Securing] terms that would be acceptable to the UK and within the specified two-year period for leaving the EU would almost certainly be impossible’

The Government no longer states that the task is impossible – the current Prime Minister has said ‘The task before us is momentous but it should not be beyond us’

Likely false

HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link; HM Government, March 2017, link

Warnings about trade

7

‘An approach based on a Free Trade Agreement would not come with the same level of obligations, but would mean UK companies had reduced access to the Single Market’

The Secretary of State for Exiting the European Union has said that he thinks the Government can secure a ‘comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have’

Likely false

Alternatives to membership: possible models for the United Kingdom outside the European Union, March 2016, link; Hansard, January 2017, link

8

‘We would lose our preferential access to 53 markets outside the EU with which the EU has Free Trade Agreements. This would take years to renegotiate, with no guarantee that the UK would obtain terms as good as those we enjoy today’

Many of the countries that the EU has struck trade deals with have made clear that they want to strike a trade deal with the UK quickly. Richard Graham, the Prime Minister’s trade envoy to the Philippines, has also suggested that the UK can effectively clone the EU’s current trade deals.

Likely false

Alternatives to membership: possible models for the United Kingdom outside the European Union, March 2016, link; Express, April 2016, link

9

‘It would take up to a decade or more to negotiate a new agreement with the EU and to replace our existing trade deals with other countries’

The EU’s trading partners have confirmed that they want to strike a quick trade deal with the UK, often using the EU’s trade agreements as a template. Countries that have made such statements include Canada and Mexico.

Likely false

Alternatives to membership: possible models for the United Kingdom outside the European Union, March 2016, link; Financial Times, June 2016, link; Daily Mail, December 2016, link; Sun, February 2017, link

10

‘Many of our trading partners, including the United States, are already negotiating with the EU. Before they start negotiations with the UK they are likely to want those deals to conclude’

The new United States Government has confirmed that it will make striking a trade deal with the UK a priority over any trade deal with the EU

False

The process for withdrawing from the European Union, February 2016, link; Telegraph, February 2017, link

Warnings about economic fallout

11

‘Under any of these alternatives, there would also be a non-economic cost, in terms of the UK’s security and strength’

The Government has been clear since the referendum that Brexit will not harm the UK’s security: ‘we see Brexit as a new opportunity not to step back but to step up, recasting our European defence relationship to make it fitter for modern times.’ The Government has confirmed that the UK’s security capabilities will be a net strength in the upcoming negotiations, stating ‘the United Kingdom wants to agree a deep and special partnership between the UK and the EU, taking in both economic and security cooperation’

Likely false

Alternatives to membership: possible models for the United Kingdom outside the European Union, March 2016, link; HM Government, September 2016, link; HM Government, March 2017, link

12

‘A vote to leave would cause an immediate and profound economic shock creating instability and uncertainty which would be compounded by the complex and interdependent negotiations that would follow’

It is now accepted by economic commentators and consultancies that there was no economic shock following the UK’s departure.

False

HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link; Guido Fawkes, February 2017, link

13

‘The effect of this profound shock would be to push the UK into recession… The analysis shows that the economy would fall into recession with four quarters of negative growth’

The UK’s economic growth has continued to be positive every quarter since the referendum.

False

HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link; ONS, link

14

‘Unemployment would increase by around 500,000, with all regions experiencing a rise in the number of people out of work’

The employment rate has increased since the referendum.

False

HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link; ONS, February 2017, link

15

‘Businesses and households would respond to this by putting off spending decisions until the nature of new arrangements with the EU became clearer. This uncertainty effect would also lower overall demand in the economy in the immediate aftermath of a vote to leave’

UK consumer spending has increased since the referendum

False

HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link; ONS, March 2017, link

16

‘A vote to leave… would immediately lead to an increase in the premium for lending to UK businesses and households.’

The Bank of England responded to the referendum result by cutting interest rates to 0.25% – where it has remained

False

HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link; Bank of England, March 2017, link

17

‘CPI inflation rate [will be] higher by 2.3 percentage points after a year’

The inflation rate increased between March 2016 and March 2017 by 1.8 percentage points. It should be noted that Eurozone inflation has also increased over the same period to the highest in four years.

Only partially true

HM Treasury analysis: the immediate economic impact of leaving the EU, May 2016, link; ONS, March 2017, link; Financial Times, March 2017, link

18

‘[There would be] a reduction in foreign investment’

ONS Investment figures for 2016 will not be released until December 2017, however there have been a number of very large investments into the UK, including a £24bn investment by SoftBank, and Deutsche Bank’s post-Brexit commitment to London by agreeing a new HQ lease after 2023.

Likely false

HM Treasury analysis: The long-term economic impact of EU membership and the alternatives, April 2016, link; Telegraph, August 2016, link, Telegraph, March 2017, link

Warnings about international influence

19

‘Our vote to leave, and the withdrawal negotiations themselves, would have an impact on our ability to affect the EU’s decision-making.’

Under Article 50 TEU, the UK will not be able to partake in discussions of the EU-27 when they formulate their Brexit strategy.

True

The process for withdrawing from the European Union, February 2016, link