2. What assessment has the Minister made of the impact that the £66 billion HM Treasury deficit resulting from Brexit will have on Wales? OAQ(5)0049(FLG)

What assessment has the Cabinet Secretary made of the impact that the £66 billion deficit predicted in the leaked treasury report will have on Wales if we were to have a hard Brexit?

I thank Eluned Morgan for the question. The protection of our economic interests in the Brexit context is vital to Wales. Together with finance Ministers from Scotland and Northern Ireland, I will meet with the Chief Secretary to the Treasury next week ahead of the autumn statement. The impact of EU transition is at the very top of our agenda.

Thank you. The Cabinet Secretary yesterday gave a warning that there are leaner times ahead, and that this year’s budget should be used as an opportunity for those public sector recipients of funding to prepare for cuts in terms of the austerity that’s being imposed by the UK Tory Government. But now we have this additional problem of this £66 billion of a projected shortfall if we were to go for a hard Brexit, complying with World Trade Organization rules rather than having free unfettered access to the EU. That would make a massive dent in Welsh Government receipts. To what extent has the Cabinet Secretary factored into his predictions the impact of that £66 billion dent, and what impact would that have on future capital expenditure projections?

Eluned Morgan draws attention to the long-term impact that leaving the European Union on the wrong terms would have for Wales. The budget I laid yesterday grapples with the immediate consequences of losing potentially European funds that otherwise would have come to Wales. But the long-term impact of lower growth in the UK economy, with everything that that would mean in terms of tax receipts and money available for public expenditure, is the greater long-term anxiety. For yesterday’s budget, it’s beyond the scope of the one-year revenue budget that I was able to lay, partly because of the uncertainties that she points to. Undoubtedly, if we were to see cuts on anything like the scale suggested in that leaked document, the implications for Wales would be very serious indeed.

In addition to the Treasury forecasts that were leaked regarding the fiscal deficit and the impact of Brexit upon that, there have also been numerous reports on the impact of leaving the European customs union and the single market as well—all issues I expect will be discussed at the Brexit Joint Ministerial Committee that I understand is happening on Monday. Of course, in the Scottish press, that’s being characterised as a Sturgeon-May showdown. Can the Cabinet Secretary tell the Assembly who will be representing Wales at that Brexit JMC and what the game plan is to ensure that Wales’s voice is not drowned out?

The Welsh Government will be represented at that JMC by the First Minister and I will accompany him to that meeting. We will go into those negotiations in exactly the same way as you would expect Ministers in Scotland and Northern Ireland to approach those discussions, making sure that the interests of Wales are firmly and inescapably drawn to the attention of the Prime Minister and other UK Ministers, and to ensure that our voice goes on being heard as the UK’s negotiating position continues to develop.

Minister, obviously, since 23 June, the sky has not fallen in, economic growth is in good health and, ultimately, manufacturing capacity is expanding. There have been many predictions on both sides of the referendum debate, but what we’re dealing with here is the real world that needs to now take shape, post the negotiations. Have you had discussions with your Cabinet colleagues about the promotion of Wales as a destination for investment and investment opportunities, because the other devolved administrations and, indeed, regions across the United Kingdom are ramping up their operations, obviously, to promote the virtues of their area? Have you had discussions with Cabinet colleagues about making additional resources available to make a stronger platform to promote what Wales has to offer, post the Brexit referendum vote on 23 June?

The promotion of the Welsh offer remains a very important part of the work that the Government does as a whole, and it’s led by my colleague Ken Skates. I think it’s fair to point out to the leader of the Conservative Party that we’re yet to leave the European Union, and the impact of that on our economy remains very much still to be seen. What is absolutely clear, from those businesses that have talked directly with the First Minister and with the Cabinet Secretary, is that full and unfettered access to the single market remains a determining factor in businesses that wish to locate in Wales.

Can the Cabinet Secretary confirm that there is no official Treasury forecast of a £66 billion deficit from Brexit, and that this figure came from one briefing paper amongst many by one anonymous Treasury civil servant, and may well have been written in order to be leaked in the first place? The £66 billion shortfall in tax revenue, which is what it referred to, would imply a 9.5 per cent collapse in our national income. This is clearly preposterous given that, even if we have no deal with the EU arising out of these Brexit negotiations, 75 per cent of the traded goods and services of the EU have a zero tariff in any event.

Well, the £66 billion figure comes from a leaked document, as the Member agreed. Nevertheless, the Treasury produced a series of far more formal briefings in advance of the referendum on 23 June. All of those demonstrated the adverse effect that leaving the European Union would have on the United Kingdom’s economic prospects. I see that the Treasury has not disassociated itself from any of the statements it made then.