Former chancellor and Brexiteer Norman Lamont has left the Bank of England boss incredulous as he asked questions about the pro-Brexit fantasies of having 0% tariffs between the UK and EU.
While Lord Lamont’s no-deal Brexit fantasies might wash with a television host, it certainly did not with the govenor of the Bank of England, who could not hide his bafflement as he answered questions from peers on the Lords Economic Affairs Committee.
Lamont was keen that Carney produces modelling on 0% tariffs in the event of the UK crashing out of the EU, even though it appears 0% is the figure of probability it would happen.
‘There’s no reason to model one that would be 0% on both sides, I don’t think,’ said Carney.
‘You could forecast the economy, despite the psychology, what it was going to do,’ responded Lamont, baffling the govenor further.
‘You can forecast it, but I don’t follow the logic of 0% WTO rules.’
But the former chancellor continued to try to push his Brexiteer logic, saying that it ‘might be one worth documenting.’
Carney tried to remain diplomatic as he explained why it just would not work.
He continued: ‘I’m sorry for stating the obvious, if it applies a 0% tariff to the UK for 15% of Europe’s trade, it then has to provide a 0% tariff for the rest of the world.’
Lamont then tried to use Article 24 for how this could be a possible scenario for a no-deal Brexit.
Article 24, formally Article XXIV of the WTO’s General Agreement on Tariffs and Trade (GATT), sets out the rules under which countries can make free trade deals.
But the Bank of England did not agree with the pro-Brexit interoperation of the documentation.
‘That is certainly not my understanding of GATT Article 24, if there is not a rollover of the customs union, one has to be in a process of adjusting the customs union.
‘A common understanding of a no-deal scenario – maybe I’m lacking imagination here – but by definition a no-deal scenario is not a deal and therefore is not a process.
‘It is a process if there is a withdrawal agreement and implementation period and on-going negotiation period, which is what affords the ability to maintain in effect the status quo.’
Last year the Bank warned Britain would be tipped into a recession worse than the financial crisis in the event of a no-deal disorderly Brexit – and warned that the worst-case scenario could lead to Britain’s GDP falling by 8%.