The UK government has been accused of breaching EU budget rules to fund its Brexit negotiations and then selling off its assets at record low prices, according to new analysis.
The UK government’s Brexit negotiator, David Davis, has insisted the Brexit talks were “one of the most important ever” for the country, and that it would continue to “be one of the biggest markets for the UK”.
But in the days before Brexit, the government was forced to sell off almost half of its property holdings, according in a report by the Institute for Fiscal Studies (IFS).
The IFS analysis is based on the sale of all the government’s assets including public and private sector enterprises and its main international bank, Barclays.
The British government has a deficit of £9.3bn as of September 30, according the latest Treasury figures.
Its deficit has grown by £1.1bn since the Brexit negotiations began.
The government’s surplus is at £6.7bn, compared with a surplus of £2.9bn at the end of the last parliament, which the UK voted to leave.
But the IFS said this “is a clear indication that the Brexit settlement is likely to be less generous than expected”.
“It also shows the extent to which the government has done its due diligence to ensure that its position is strong and robust in the event of a hard Brexit,” it said.’
Not in our interests’The IHS said the government should have sold off more of its assets, such as its £1bn Royal Mail stake and its $6bn stake in Lloyds Banking Group, because the value of its sterling assets was rising and its economy was contracting.
The IIS said the sale price of some of the assets “must have been substantially lower” than the value at which they were listed on the UK market.
“These are assets which would have been used to support UK growth and jobs,” it added.
The bank said it had “been advised by the UK Treasury that there was a real risk that some of these assets would be sold at a loss”.
“In a difficult financial climate, the sale was a logical and prudent option, and should have been a priority for the Treasury,” the bank said.
The Treasury had not responded to a request for comment.
The report follows a scathing assessment by the independent Bank of England of the British government’s approach to Brexit negotiations, which has seen it sell off the assets of other parts of the economy and its central bank.
Last month, the Bank warned that the UK could face “considerable disruption” as a result of Brexit, and said it was “likely” the UK would face “severe financial turbulence”.