Brexit weekly briefing: autumn statement fallout dominates headlines | | | Philip Hammond predicts £59bn black hole in public finances and Theresa May meets Polish prime minister | | |  Philip Hammond's autumn statement was dominated by Brexit. Photograph: Peter Nicholls/Reuters
| | | Jon Henley and Jessica Elgot
| | | Welcome to the Guardian's weekly Brexit briefing, a summary of developments as Britain moves towards the EU exit. If you'd like to receive it as a weekly email, please sign up here (and check your spam folder if you don't see it in your inbox). Producing the Guardian's thoughtful, in-depth journalism is expensive – but supporting us isn't. If you value our Brexit coverage, please become a Guardian supporter and help make our future more secure. Thank you. The big picture For a government determined that Brexit means Brexit (which means, as we all now know, that Britain is leaving the European Union and will do so with the best possible deal for Britain), it was a week of warnings, challenges and setbacks – economic, political, procedural and legal. The chancellor, Philip Hammond, announced that the Office for Budget Responsibility had calculated that Brexit – or rather the lower migration, slower productivity growth and higher inflation likely to be caused by Brexit – would blow a £59bn hole in the public finances over the next five years. Inevitably, the backlash to a forecast that many economists felt was, if anything, rather optimistic, was swift. Iain Duncan Smith dismissed "another doom-and-gloom scenario" from an organisation "that simply hasn't got anything right"; his fellow pro-Brexit MP Jacob Rees-Mogg said the OBR had made "lunatic assumptions" and that "experts, soothsayers, astrologers are all in much the same category". But the Institute for Fiscal Studies echoed the OBR's analysis, saying Brexit would hit productivity and wage growth, and the falling pound would drive up inflation. In a warning also savaged by leave campaigners, the IFS warned that Brexit would cause the biggest pay squeeze in Britain for 70 years. Its head, Paul Johnson, said: One cannot stress enough how dreadful that is – more than a decade without real earnings growth. As if heartened by these warnings of Brexit's dire economic consequences, two former prime ministers stepped up last week to suggest that the process was not irreversible. In an interview with the New Statesman, Tony Blair said Brexit could always be halted if voters decide they don't like the final look of it: It can be stopped if the British people decide that, having seen what it means, the pain/gain, cost/benefit analysis doesn't stack up. His predecessor, John Major, also rallied to the cause, saying at a private dinner that although he accepted the UK would not remain a full member of the EU, the 48% of voters who wanted to remain should not be subject to the "tyranny of the majority" and there was a "perfectly credible" case for a second referendum on the final deal. As Theresa May was warned it would be "fiendishly difficult" to negotiate a transitional deal with the EU to avoid a "cliff edge" for UK businesses when the two-year article 50 exit process comes to an end, a report commissioned by an alliance of Tory, Labour and Liberal Democrat politicians warned that a hard Brexit would do immense damage across the British economy. | | | Former prime ministers John Major and Tony Blair share a platform for the remain campaign event at the University of Ulster. Photograph: Reuters
| | | The report by the Centre for Economics and Business Research, which found that every major wealth-creating sector would be hit if the UK left the single market, came as a cross-party campaign by MPs and political figures seemed to be gathering pace to prevent the kind of "clean break" with the single market favoured by some Brexit campaigners. One of those involved said: A lot of people are a bit unsure what to do; they're caught between their own views and those expressed at the ballot box, often by their own constituents. There's a growing realisation that this is a long game. It's hard to coalesce people around particular policy positions when the government has no policy to speak of. It's quite a challenge. Last but not least, the government faced a fresh legal challenge. Besides its appeal against a high court ruling that parliament must vote on article 50 (the supreme court begins hearing that next week), the government may now have to contest a claim that MPs should also have a say over single market membership. Lawyers for the pro-remain group British Influence will argue that leaving the EU does not automatically mean Britain also exits the European Economic Area (EEA), which allows non-EU countries such as Norway to be part of the single market. They argue that as well as triggering article 50 of the EU treaty to leave the EU, the government may need to trigger article 127 of the EEA treaty to exit the EEA. Needless to say, the government – plus some EU legal experts, including a former head of the European council's legal service – disagrees, saying Britain is a member of the EEA only by virtue of its membership of the EU and that as soon as it leaves the latter, it exits the former. Over to the judges … The view from Europe More of the same, really: warnings, challenges, setbacks. Explaining for the umpteenth time why Britain would not be able to curb EU immigration and retain barrier-free access to the single market, German MEP Manfred Weber said: The four fundamental freedoms are not negotiable. We will not move a millimetre from this position. There can only be a good agreement between the EU and the UK if Europe's basic rules are accepted. Joseph Muscat, the prime minister of Malta – which takes over the EU's rotating presidency in January, said the same: There is absolutely no bluffing from the EU side, at least in the council meetings I have attended – no one is saying: 'We will start in this position and then we will soften up.' No, this is really and truly our position, and it will not change. Muscat also added that now the supreme court was involved, he would "not be surprised" if the government missed the 31 March deadline it has set for triggering article 50, and warned of a "clear and present danger" that the European parliament would veto any deal anyway. The Polish prime minister, Beata Szydło, was in town and met May at No 10, where she received assurances of continued strong business, diplomatic and cultural ties as well as a deployment of troops near the Russian border. But Brexit was "not the most important topic" at the talks, Szydło said (nor could it be until article 50 is triggered), and May did not offer any outright guarantees as to whether the almost 1 million Poles living in Britain will be able to stay. | | | The British prime minister, Theresa May, right, and the Polish prime minister, Beata Szydło, attend a joint press conference at 10 Downing Street. Photograph: Peter Nicholls/AFP/Getty Images
| | | Meanwhile, back in Westminster Will they? Won't they? Labour is still not crystal clear if it would support a second EU referendum on the terms of the Brexit deal. "I think that we need to take this in stages," the shadow foreign secretary, Emily Thornberry, told the BBC. Pushed again on the issue, Thornberry said the process needed to be taken "step by step". Her shadow cabinet colleague, Diane Abbott, told the Guardian over the weekend that the party needed to stand up for free movement, and would not win an election as "Ukip-lite". However, moderate Labour MPs, including prominent voices such as Dan Jarvis and Chuka Umunna, both made strong cases last week for more controlled immigration. Umunna also said he would not work with anyone, including Tony Blair, who was pushing for a second referendum. His focus now was campaigning to keep the UK in the single market, he told an Open Britain event with the former Liberal Democrat leader Nick Clegg and Conservative pro-remain MP Anna Soubry. One party that knows exactly where it stands is Ukip. Paul Nuttall was elected leader of the Eurosceptic party on Monday following a unexpected resignation, a leadership statement signed "under duress" and a punch-up at the European parliament. Nuttall, a former history lecturer from Merseyside, said his ambition was "to replace the Labour party and make Ukip the patriotic voice of working people". The real drama this week is a few stops down the District line from Westminster, at the Richmond Park byelection between Brexiter and former Conservative Zac Goldsmith and the Lib Dems' Sarah Olney. Goldsmith is standing as an independent in protest at Heathrow expansion, but the Lib Dems fancy their chances of snatching the seat in the constituency that recorded one of the highest remain votes in the country.
You should also know: - The UK economy continues to confound forecasts of a post-referendum slump, with retail sales, the housing market, broad business growth and employment all holding up.
- Brian Kerr, Britain's most experienced EU negotiator, said there was a less than 50% chance of securing an "orderly Brexit" within two years and warned of a possible "decade of uncertainty".
- The Bank of England governor, Mark Carney, is working on a "secret plan" for a transitional Brexit arrangement to keep Britain in the single market until 2021, the Sunday Times reported.
- Matthias Wissmann, the head of the German car industry association, said prolonged uncertainty on the government's Brexit position could damage investment in the UK.
- The Treasury refused to tell the OBR anything about the possible cost of the promises it made to Nissan to persuade the carmaker to stay in the UK.
- Aldi and Lidl have begun putting up prices of basic groceries as the post-referendum fall in sterling starts to bite.
- Richard Branson is helping to fund a new group to fight Brexit headed by Alan Milburn, the former Labour health minister.
- Government efforts to keep Brexit negotiations secret could include secure reading rooms for MPs and peers to read strategy documents.
Read these: In the Guardian, Polly Toynbee argues that sooner or later, May and Hammond are going to have to put Britain before a catastrophic Brexit, which she compares to "a dry rot whose tendrils will creep into every last aspect of national life": It's not giving away her hand for May to proclaim a determination to stay in the single market and the customs union. Only fear of her own party stops her setting out that strong negotiating position. Sooner or later she will have to face the "bastards" down, putting country before party. Sooner or later, Hammond will have to stop pretending the economy is OK: this worm will have to turn. No more taking the flak for an economic storm the Brexiters have brought down on his head. Martin Kettle turns his ire on the Brexiters' brutal trashing of the independent OBR "simply because they can", arguing that the pro-leave camp is now bent on doing down all those who dare stand in its way: The only fact they believe in is the result of the referendum. Nothing else matters to them. And, for now, they command the arena in which every political argument is conducted, even if they do not command the argument. The attempt to humble the OBR is intended as a reminder to Hammond and Theresa May that the Brexiteers are masters now, and will be so until they are stopped. Tweet of the week Top-tier trolling (or on-message post-Brexit optimism) from the Foreign Office: | | | | |
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