Thread by @uk_domain_names

It's important to understand why the global financial crisis was so harsh, because it signposts the way for the likely damage we will incur from Brexit.

Put plainly, by far the biggest damage came from lower tax receipts (see graphic)

Through a combination of Government tax policies and slower economic growth, the Treasury took in £236 billion less over the 2008-2018 period than it was "supposed" to (ie compared to what it would have collected if you simply raise the 2008/9 tax figure in line with inflation)

That massive shortfall is 7x the £33 billion of the bank bailout (latest figure - it used to be higher, but much of the money has been repaid to the Government by now)

Think on that for a moment. Over £200 billion in taxes uncollected because of the economic downturn.

So while all the attention is on the role of the banks in the chaos of 2008, much much more damage came about simply as a result of lowered growth. That's not to absolve the banks of all responsibility, merely to emphasise that they did not *directly* cause most of the shortfall.

Brexit will be exactly the same: growth will slow and will fall behind the replenishment level that inflation demands just to keep up.

That will mean a lower tax take for many years or decades, which will inevitably translate into more austerity and less Government spending.

It's not rocket science. It's not even particularly difficult economics. Relatively small negative changes to the economy have huge tax consequences, because taxes are generally only levied over certain thresholds, or after deductions.

For instance, Corporation Tax is levied on profits not turnover. But a small drop in turnover can mean a huge drop in profits (or even losses) because many industries operate at profit margins of just a few %.