Liam Fox says Treasury's no-deal Brexit forecasts are 'hard to swallow'

Alexandra Rogers
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International Trade Secretary Liam Fox Visits Manchester
Fox said the Treasury had failed to predict the financial crash (Source: Getty)

International trade secretary Liam Fox has said Treasury forecasts over a no-deal Brexit are 'hard to swallow', highlighting critical divisions in the Tory party over Brexit.

Last month Philip Hammond, the chancellor, warned there would be "large fiscal consequences" if the UK crashed out of the European Union, including that Britain could end up borrowing an extra £80bn a year for the next 15 years if it defaulted on terms set out by the World Trade Organisation (WTO).

Speaking on the Andrew Marr show, Fox – who has backed Theresa May's summer Chequers proposal – said: "Can you think back in all your time in politics when the Treasury have made predictions that were correct 15 years out? I can't.

“They didn’t predict the financial crisis that happened. No one could. The idea that we can predict what our borrowing is going to be 15 years in advance is just a bit hard to swallow."

Divisions over May's Chequers proposal, in which the prime minister is seeking a free trade area for goods with the EU that strongly resembles the existing regulatory customs arrangements with the bloc, were laid bare when former Brexit secretary David Davis told Marr that the deal was "worse than staying in the EU".

Davis said if the deal came back to parliament he would vote against it.

Fox responded by saying there was "nothing worse than staying in the EU" and called Chequers a "no-brainer".

The EU too has cast doubts over the proposal. Its chief negotiator, Michel Barnier, gave an interview with German newspaper FAZ in which he said he was “strongly opposed” to Chequers because it would “destroy” the EU.

Earlier today May sent out a message to potential mutineers in her party to say she would make "no compromises" on her Brexit plans that would "threaten the national interest".

It comes as the Sunday Times reported that the director of her election campaign, Lynton Crosby, was gearing up to launch an alternative to Chequers with Brexiters associated with Jacob Rees-Mogg's European Research Group before the Tory party conference later in the month.

Read more: Theresa May vows no compromises on Brexit plan as Tory conference looms