Thread by @IanDunt

OBR forecast coming up. This will be grim.

11.3% contraction this year. Largest fall on output for 300 years.

Expecting growing of 5.5% next year, 6.6% 2022.

Economic output not expected to return to pre-crisis levels until fourth quarter of 2022.

UK to borrow £394bn this year equivalent to 19% of GDP. Highest level of borrowing in peacetime.

Here comes the fiscal foreshadowing: "This situation is clearly unsustainable over the medium term."

OBR expects 7.5% unemployment next year - 2.6m people out of work.

"I cannot justify a significant across the board pay increase for all public sector workers." Really dislike the comparison made with private sector workers. By maintaining demand in the economy, you help the private sector. It's not a zero-sum game.

As expected, Sunak cuts foreign aid to 0.5%, breaking 2019 manifesto commitment. Last bit of symbolism of a supposedly more compassionate Conservatism bites the dust.

£4bn 'levelling up fund' is the rabbit in the hate - attempting to finish off with good news. But it does sound promising.

Find Sunak's delivery completely hopeless to be honest. No gravitas, or presence. Oddly patronising. Like he's visiting a primary school.

Rather than losing the will to live while the chancellor shouts impossible numbers at you, you can read the spending review here gov.uk/government/pub…

Brexit wasn't mentioned once by the chancellor. In a spending review. 37 days before the UK leaves the single market and customs union.

But at least Anneleise Dodds remembers it exists and is happening. "In less than 40 days, we're due to leave the transition period, yet the chancellor didn't even mention that in his speech."

"There's still no trade deal. So does the chancellor truly believe his govt is prepared and that he's done enough to help those businesses which will be affected."

However, Brexit is mentioned in the OBR forecast document. They asked the government to "confirm its policies in areas that are likely to be affected" but "on several issues" there was an "absence of more specific policy and operational detail".

No deal Brexit could reduce real GDP by a further 2% in 2021.

Worst of all worlds scenario: "By 2025-26, if a no-deal Brexit is combined with our
downside virus scenario, debt stands at 126.3% of GDP."

The argument that you can cover-up the damage of no-deal Brexit because of the carnage of covid is fully dismantled in this paragraph. It makes for very grim reading. No-deal Brexit hits completely different sectors.

"The non-overlapping sectoral impact suggests that the loss of output associated with defaulting to WTO terms is likely to be largely additive to that suffered from coronavirus."

Government and businesses have been distracted from preparing for Brexit by covid, "while also running down cash reserves and inventories making them more vulnerable to shocks".

Anyone who still needs to be told this will probably never accept it, but further demonstration here that you cannot make up the economic loss of no-deal Brexit by signing trade deals with other countries

The Brexit hit to GDP from friction on the border is temporary. The Brexit hit from a decline in productivity is permanent.

No matter how the pandemic plays out, a no-deal Brexit delays the point at which output returns to its pre-virus peak.

So I think it's clear why the chancellor chose not to talk about Brexit in his speech.

I'm a bit baffled tbh on why the OBR keeps pushing the short-term disruption impacts of Brexit into the no-deal assessment when they apply nearly equally to a deal.