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Brexit

Chancellor told no-deal Brexit will see government slash public spending

Peter Byrne/PA Wire

By Richard Wheeler, PA Parliamentary Editor

Sajid Javid accused the opposition of having "made up" Brexit warnings, amid predictions a no-deal scenario would see the Government slash public spending.

The Chancellor was pushed by the Liberal Democrats to "tell the truth" about the impact of a no-deal exit on the health service, schools and police.

Labour added it is "impossible" for the Government to honour pledges of higher public spending, falling debt, and leaving the EU without an agreement.

But Mr Javid dismissed the warnings and maintained the Government line of seeking to deliver Brexit by October 31.

Mr Javid also refused to answer a question on whether a no-deal Brexit is intended to help currency speculators and hedge funds who bankroll the Tories, calling it a "ridiculous" suggestion.

Speaking at Treasury questions, Mr Javid said "intensive" negotiations were taking place with Ireland and others on Brexit.

Asked if it is also in the interests of the EU to reach a deal, Mr Javid said: "It's in everyone's interest, ours and our European friends and partners, that we reach a deal.

"There are intensive negotiations going on, both with the Irish government and our other European partners, and I think there is a very strong recognition that it's in all our interests that we reach a deal."

Liberal Democrat former minister Sir Ed Davey highlighted the "alarming" fiscal analysis of a no-deal Brexit compiled by the Office for Budget Responsibility (OBR).

He noted: "Even in its least damaging no-deal Brexit, the OBR predicts a hit to Britain's finances that would destroy every single spending announcement by the Prime Minister and the Chancellor.

"Given that, isn't it unacceptable for a Chancellor and a government to be publicly contemplating a no-deal Brexit, to fail to tell the truth to the British public that spending on health, schools and police will be slashed in the event of a no-deal Brexit?"

Mr Javid replied: "I don't recognise that picture at all, it's one just made up by the Liberal Democrats."

Shadow Treasury minister Jonathan Reynolds warned that the Government cannot deliver everything it is promising on Brexit, and via its spending commitments.

He said: "The Government's current policy is that we can have higher public spending, falling debt and a no-deal Brexit.

"But those three things are impossible to deliver together.

"So on which of them is the Government not telling the truth?"

Mr Javid replied: "This Government is focused on leaving the European Union on October 31 and we are trying to do that with a deal, and if we don't we'll leave with no-deal.

"He talks about the Government's policy - at least this Government has a clear policy on Brexit. What's the policy of the Labour Party?"

Earlier, Mr Javid accepted Brexit uncertainty has caused "significant concern" for businesses, before adding: "What they want to see is the Government deliver on Brexit and leave on October 31."

Labour's Helen Hayes (Dulwich and West Norwood) said there is "evidence of a rise in short positions being taken out against the pound" before adding: "Is the minister confident that the hedge funds taking those short positions, some of which have donated to the Prime Minister's leadership campaign and to the Conservative Party, have no inside information about the planning or timing of a no-deal Brexit?"

Mr Javid replied: "That really is such a ridiculous suggestion and it doesn't deserve an answer."