The Chancellor will be urged to use next week’s Budget to hike the amount of taxpayer’s cash earmarked for investment in new border controls and other measures to get the country ready for independence from Brussels to £500million.
A further £2billion contingency fund should also be set up to ensure the Government can withstand any unexpected financial turbulence, he will be told.
And Mr Hammond is also expected to come under pressure to hit a far more optimistic tone about the UK’s economic prospects outside the EU when he delivers the financial statement to the Commons.
Senior Tory Jacob Rees-Mogg will sound the call for an ambitious Budget for Brexit in a speech today marking the launch of a report from the pressure group Economists for Free Trade.
Jacob Rees-Mogg calls on the Chancellor to prepare to leave the EU with a trade deal
I am delighted to offer some suggestions that are positive and will contribute to a bold Brexit
His intervention follows growing concern among Euro-sceptic backbenchers about the Government’s handling of the departure negotiations with the EU.
A growing number of MPs want ministers to accelerate the preparations for a break from Brussels without a trade deal in response to the months of stalling by EU chiefs.
Mr Rees-Mogg will point to forecasts from Economists for Free Trade identifying a potential £135billion windfall to the Treasury between 2020-2025 as the financial benefits from leaving the EU are felt.
“These forecasts provide head room for fundamental change in fiscal policy and the first thing to do as a matter of prudence is to allocate sufficient funds to prepare us to leave the EU without a trade deal,” Mr Rees-Mogg will say.
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“The Chancellor has so far made £250 million available this ought to be increased to £500 million with a contingency fund of £2 billion for other matters that may arise.
“This will probably not be needed and can be added back to sums already referred to.”
Mr Rees-Mogg will say he is taking up the Chancellor’s “generous” request for ideas for the Budget.
“I am delighted to offer some suggestions that are positive and will contribute to a bold Brexit,” the Tory MP is expected to say.
Mr Rees-Mogg will highlight the “Budget for Brexit” report for Economists for Free Trade prepared by Prof Patrick Minford, a former adviser to Margaret Thatcher, and other leading economic thinkers.
“This Budget marks a real opportunity for a turning point in the conduct of fiscal policy in the UK,” Mr Rees-Mogg is expected to say.
“Brexit provides the chance to signal to the world that Britain is open for business and that this Government is going to make the UK one of the most competitive economies in the world.
“Most importantly, from the 29th March, 2019 all tariffs on goods imported from anywhere in the world will be zero rated immediately if the UK has no domestic production on any significant scale or if the tariff rate is below 15%, in which case domestic producers have already benefited through the fall in the pound to compensate them for the removal of tariffs.
Chancellor Philip Hammond arrives at Number 10 Downing Street
“Many of the tariffs in the customs union protect inefficient continental manufacturing or agriculture that has no benefit for the UK consumers or businesses.
“In the long-term, protections harms the businesses it purports to help so other tariffs will be phased out.
“This will help the poorest consumers most as the highest levies are applied to food, clothing and footwear which take a larger percentage of the lowest income.
“The revenue cost is low, in the region of £3-4 billion, leaving most of the £135 billion available in 2020-2025 and the £40 billion thereafter intact as well as providing a major boost to the economy.
“This group believes that Brexit will be overwhelmingly positive for the UK economy providing we do the right things.
“The most important are: to bring down trade barriers with the rest of the world; to reduce excessive regulation of the economy and to refashion the regulatory system imposed on us because of EU membership into a system better suited for the UK; and to reduce the burden of taxation on both businesses and individuals.
“This is a free trade approach that focuses on consumers not producers; one that will generate gains to consumers seven times the cost to producers.
“This is a classical view of the world that has economic history and the latest economic modelling on its side.
Jacob Rees-Mogg will call or an ambitious Budget for Brexit
“This is a free trade approach to Government which believes Britain’s greatest days lies before it and not behind it.
“The results of these ideas will be an intensification of competition in the UK economy which will improve the UK’s productive performance.
“I confidently believe, therefore, that over the medium term the UK’s fiscal prospects are much better than those that will be revealed to you soon in the OBR’s short-term projections.
“It does its work worthily and reputably, but on the basis of false assumptions given to it by the Treasury.”
Philip Hammond is expected to come under pressure to hit a far more optimistic tone
He will say the report sets out an “optimistic” view of economic growth after Britain leaves the EU in March 2019 that will give the Treasury greater freedom when making decisions about Government borrowing, taxation and spending.
“At the heart of these forecasts is the fiscal reality that by taking a more optimistic view of the growth consequence of Brexit, based on the static and dynamic stimulus from classic free trade and combine this with continued restraint in public spending, then when post-Brexit fiscal freedom opens up public spending net borrowing (PSNB) moves into steadily increasing surplus from 2021 and a public sector debt to GDP ratio of 60% by 2025,” Mr Rees-Mogg is expected to say.
“These forecasts quantify what we call post-Brexit fiscal freedom of £135 billion between 2020-2025 and a further £40 billion per annum between from 2025 onwards.
“This includes the £10 billion a year saved by not having to make contributions to the EU budget.”