A flagship post-Brexit trade deal is worth even less than previously thought, official estimates show.
Business Secretary Kemi Badenoch was mocked for a prediction the deal with Asia-Pacific countries would grow the economy by 0.08%.
But she staunchly defended the agreement, hailed in a blaze of publicity as part of a new “global Britain” strategy.
But new figures from the Office for Budget Responsibility suggest joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) could add just 0.04% to GDP in the “long run”, after 15 years.
The figures were contained in documents released alongside last week’s Autumn Statement.
Two other deals, with Australia and New Zealand, “might increase the level of real GDP by a combined 0.1% by 2035”.
The OBR also calculates that the economy will be 4% smaller than if the UK had stayed in the EU.
Trade expert David Henig said that while entry into the CPTPP had been presented as a huge victory for the UK, its impact had been “hugely overhyped”. “Some companies will benefit, but the effects will be very small,” he told the Observer.
When she announced the deal on UK entry into the CPTPP, Ms Badenoch said it would bring “significant” benefits to the UK.
She responded to mockery of the 0.08% figure by saying her department’s estimate was probably too low and ignored some benefits.
But the Independent revealed earlier this year that officials working on the CPTPP deal changed their usual approach to calculating the GDP figure and instead used a new model that “generates larger estimated GDP impacts”, according to the government’s own documentation.
A technical document, published by the Department for International Trade, said officials could not employ their usual approach to calculating the GDP benefits of a deal, known as a “Melitz-style model”, because there were too many unknown variables.
Instead, it used a so-called “Armington-style” model, which the document notes tend to produce higher GDP figures “for a given free trade agreement”.
At the time Sam Lowe, a trade expert and senior visiting fellow at the King's Policy Institute, told The Independent: "While the approach the government has taken is perfectly credible, the change in methodology does seem to have been made with the intention of making the GDP figure sound more impressive."The Department for Business and Trade has been approached for comment.
A Department of Business and Trade spokesperson said: “As the Trade Secretary said when signing the deal, the benefits of CPTPP will increase significantly the more businesses use it."