Brexit: George Osborne warns of economic Russian Roulette

Simon Jack
Business editor
@BBCSimonJackon Twitter

Media caption,
Former UK chancellor George Osborne

The UK will still be in the European Union after 29 March. That's the most likely outcome, according to former UK Chancellor George Osborne.

Speaking to the BBC at the World Economic Forum, in Davos, he said that his successor Philip Hammond had "sensibly" told British business leaders that leaving with no deal at the end of March was not a possibility.

That would require the government requesting an extension of Article 50 - the process through which the UK leaves the European Union.

He acknowledged, however, that the prime minister had not - and will not - send the same message.

In normal times, a straight shoot out between the PM and the chancellor would very rarely happen - and if it did, the PM would usually win.

But these are not normal times.

Mr Osborne is convinced that after a devastating parliamentary defeat for her own Brexit deal, Prime Minister Theresa May has lost control of a Parliament that will step in to prevent the UK leaving the EU without a deal.

But that is not straightforward.

Russian Roulette

Mr Osborne acknowledged that if MPs do nothing, a no-deal Brexit - which the majority of MPs don't want - would happen.

"It's not enough for there to be a parliamentary majority against no deal - the law of the land says that unless we come up with an alternative, MPs can coalesce around, no deal happens."

Since there is no consensus in the country, the House of Commons, nor the cabinet, about what that looks like, no deal is still a possibility. It's a situation Mr Osborne likens to Russian Roulette.

"Russian Roulette is a game you should never play because there is a one-in-six chance of shooting yourself in the head - and the gun is held to the head of the UK economy," he says.

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Mr Osborne is now the editor of the London daily newspaper the Evening Standard.

In recent editorials he has been highly critical of what he sees as Mrs May's instincts to put Conservative Party unity before the national interest.

"When confronted with the fork in the road between no deal and no Brexit, Mrs May knows in her heart which path she will take. She will put party before country."

Different story

Many would argue that Mr Osborne did precisely the same thing as a minister in a government that felt compelled to call a referendum to fend off a UKIP that was attracting increasing numbers of grass roots Tory voters.

In the minds of the foreign political and business leaders in Davos there is still a significant doubt that Brexit will ever happen.

Trade Secretary Liam Fox will arrive in Davos on Wednesday, and he will be telling a very different story.

He will tell global business leaders that the UK is champing at the bit to leave the EU and pursue ambitious and independent free trade deals with the rest of the world.

Mr Osborne insists that leaving the EU is precisely the opposite of free trade.

"There is a very large poster here in Davos - paid for by the British taxpayer - which says that Britain is the home of free trade.

"But we are about to engage in the biggest act of protectionism and anti-free trade in our history by erecting trade barriers with countries like Germany, France and Italy."

Media caption,
Confused by Brexit jargon? Reality Check unpacks the basics

Mr Osborne speaks the same language as some members of the cabinet, but not the approved language of the government which insists we leave at the end of March come what may.

He is pretty convinced that won't happen, and he points to the financial markets as evidence he might be right.

According to Mr Osborne, the value of the pound has proved a reasonable barometer of Brexit sentiment.

Perceptions of an increased chance of soft, delayed or even cancelled Brexit usually sees sterling rise. A greater likelihood of leaving without a deal, and it goes down.

Markets have read the politics of the last two-and-a half-years poorly, but lately the pound has been going up.