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Speaking in the Commons, the chancellor claimed that leaving the EU without an agreement would cause such a hit to the UK economy the £27bn war-chest created to deal with its impact would have little impact.
Both contenders to replace Theresa May as Prime Minister have pledged to take the UK out of the EU without a deal if they are unable to get changes to the current withdrawal agreement.
Boris Johnson has promised to take the UK out of the EU on 31 October “come what may” – dialling up the chances of a no deal Brexit.
Jeremy Hunt said on Monday he would make the decision on whether to abandon talks with Brussels on 30 September, and use some of the £27billion fiscal headroom created by Hammond to help the farming and fishing sectors cope with a no deal outcome.
Warning that money might not be enough, Hammond told MPs: “I have no doubt whatsoever that in a no-deal exit we will need all of that money and more to respond to the immediate impacts of the disruption of a no-deal exit, and that will mean there is no money available for longer-term either tax cuts or spending increases.
“But let me go further, the Government’s analysis suggests that in a disruptive no-deal exit there will be a hit to the exchequer of about £90bn. [...]