Philip Hammond is right – Brexit will be a disaster for the economy. Theresa May's flippant slapdown of the chancellor defies common sense

Her description of the chancellor’s assessment of the economic damage of a “no-deal” Brexit as “a work in progress”, implying the numbers are way outdated, just doesn’t work, even on its own terms

If the best that a British prime minister can say about leaving the EU without a deal is that such an outcome would not be “the end of the world” then we are in trouble.

She puts it in the same category as if she had to miss church on Sunday, or she’d forgotten her debit card in Waitrose and she and Philip had to go back home to get it or they’d run out of milk or something. Crashing out of the EU next March, maybe with a skimpy “no-deal deal” agreement about the supply of medicines and keeping the planes in the sky is a bit more serious than she breezily implies.

The truth can be put more precisely, as it was in a letter from the chancellor to the chair of the treasury select committee, Nicky Morgan. “Not the end of the world” translates as Britain’s national income (GDP) could drop by a relative 7.7 per cent if the country left the EU without an agreement, that is as compared with the status quo. That, in turn, means borrowing could be £80bn higher in 15 years’ time. The Treasury put the range of GDP relative loss at 5 per cent to 10.5 per cent. Imagine, if you will, a cut in the size of your own wages that big and then appreciate the scale of the issue.

When reminded about it, May tried to slap her own chancellor down. Except it wasn’t even a very good put-down. Her description of the chancellor’s assessment of the economic damage of a “no-deal” Brexit as “a work in progress”, implying the numbers are way outdated, just doesn’t work, even on its own terms. The numbers date back to January. So what? Everything in economics is a “work in progress”, in the sense that we cannot predict the future with certainty – as HM Treasury knows all too well.

All you can do is try and make the best estimate of a range of outcomes, and plan accordingly, in Hammond’s case for future levels of tax, funding for public services and borrowing. What was true in January is true today, because it is a comparative analysis, and the basics of cutting ourselves off from our major markets remains true. If the world economy carries on booming, then the loss of trade from Brexit will be mitigated in part, and growth would hold up, as it has recently.

But the point is the Treasury analysis is simply to say what the comparative situation would be, either in a global recession or a global boom – which is Britain will be poorer than otherwise. Simple as that. Unarguable. The chancellor is doing his job; the prime minister is undermining him. This is not good.

Common sense dictates that however bullish you are about the long term – and Jacob Rees-Mogg should be thanked for his candour in thinking that it might take half a century for the benefits of Brexit to feed through – there will be economic disruption, lower investment, fewer jobs, shrinking tax revenues. The City, in particular, is a huge cash cow for the Treasury, generating vast tax revenues from taxes on investment banks, and the incomes and spending of their high-rolling staff. Any damage to that base would have severe consequences.

So would a loss within a few years of high-value manufacturing such as Airbus, and the mass-market car industry – Honda, Nissan, Toyota, BMW and all the rest who’ve voiced disquiet. If anything, HM Treasury may be underestimating things; Britain could return to being the “sick man of Europe”, as it was before the UK joined in 1973.

In short, we cannot lose the aerospace industry, car making and our place in the global financial service industry, among other disasters, and think no one will notice. It will not be business as usual. No-deal Brexit means higher taxes and a quite radical re-think for the public sector – hard choices, cuts, austerity, exiting some areas. We won’t have the money to fund long-term care, say, and nor will we have the EU workers to staff the system, such as it is. That, actually, might be close to the end of the world for some.

Some Leavers, if they were being honest, would admit that was the whole rationale for Brexit – to create the conditions for a Thatcherite, Singapore-on-sea, freewheeling, free-market, privatised, deregulated neo-liberal paradise with the welfare state reduced to a means-tested rump run by charities. The rest of the country, including May, would view that with horror. Hammond is merely pointing to the reality of things.

Don’t shoot the messenger, prime minister.