Given the constant invocations of the “Battle of Britain” spirit regarding our apparently imminent departure from the European Union, it’s worth dusting off one of the classic economic texts of the era.

In 1940, John Maynard Keynes published a pamphlet entitled How to Pay for the War. The great economist was making a simple point. Wartime required more in the way of production and that, in turn, would lead to more in the way of both employment and overtime. The resulting increase in incomes, however, threatened to raise household consumption at precisely the wrong moment: production, after all, was being ratcheted up to make tanks and planes, not to satisfy demand for domestic fripperies.

Keynes thought the best solution was a combination of higher taxes and what he described as “deferred pay”, whereby people’s earnings would be converted into consumption but only after the end of hostilities and the resumption of “peacetime” production. That way, the risk of excessive inflation would be minimised and the balance of payments would not totally spiral out of control.

As it turned out — both during the Second World War and in the years that followed — Britain relied far more on rationing than Keynes had hoped. And because the war had been associated with huge increases in indebtedness, there was no post-war consumption bonanza: instead, austerity prevailed.

Keynes may not have convinced everyone of his ideas but his analysis of the problem was surely right. And it’s an analysis, oddly, which carries relevance for our impending post-Brexit world. I’m not for a moment suggesting we’re about to increase our production of munitions at the expense of, say, a few loaves of Hovis. Nevertheless, as Keynes identified all those years ago, there’s a risk that, once we’ve left the European Union, there simply won’t be enough production available to meet our intended non-military consumption.

Admittedly, this is not the message coming from Boris Johnson and Jeremy Hunt. They’re more worried about bolstering demand following our new-found independence from the EU than about future supply constraints. In Johnson’s case he’s promising to raise the threshold for paying both national insurance contributions and the top rate of income tax while, at the same time, hoping to increase spending on education, the police, broadband and infrastructure.

Some of this might, in time, add to the UK’s productive potential. The problem is that a lot of other things in the near term will be subtracting from that potential, particularly in the event of a no-deal Brexit.

The first problem is the reduced access to trade with the EU. Outside the customs union, British firms will increasingly become separated from European supply chains and, as such, will become less competitive than they once were. Second, foreign companies who once happily invested in the UK may now head elsewhere, reducing our productive capabilities.

Third, the UK will be stuck for a while in a no-man’s land, caught between lost opportunities in Europe and an absence of opportunities in the rest of the world: exporters will struggle to do well in these circumstances. Fourth, as migrant labour heads elsewhere, British companies will initially end up paying higher wages for workers without the requisite skills: profit margins will inevitably come under pressure and some businesses may not be able to survive.

Keynes explained how to pay for the war. Whoever ends up in Number 10 will have to work out how to pay for Brexit. If Britain’s productive potential falters, a bit of fiscal stimulus will achieve only so much. There’s a good chance that the boost to demand from fiscal handouts will serve only to suck in more in the way of imports, in turn increasing the UK’s balance of payments current account deficit.

"UK productivity has been lamentable. Brexit in any of its forms will probably slow things even further"

That wouldn’t have mattered so much when plenty of foreign investment was pouring into a UK safely embedded within the single market. Outside that market, however, there’s every chance that sterling will come under downward pressure. For exporters, that won’t be such a bad thing. For households, however, prices of imported goods will probably rise, making them worse off.

And how would the Bank of England respond? There’s definitely a much more dovish tone emerging from Threadneedle Street recently. Last week Gertjan Vlieghe, a member of the Bank’s monetary policy committee, signalled he would happily push for near-zero interest rates in the event that Britain ended up with a no-deal outcome. Given the likely loss of confidence, it’s not an unreasonable position. Yet a combination of lower rates alongside a sizeable fiscal stimulus would likely place even more downward pressure on sterling. That might not matter from an inflationary point of view but, again, it would lead to higher import prices and squeeze household incomes.

In recent years, UK productivity performance has been lamentable. Output per worker has risen at a snail’s pace. Brexit in any form will probably slow things even further. In the event of a hard Brexit, there’s even a risk of recession.

The near-term demand shock is not, ultimately, the UK’s biggest problem. If our supply potential is seriously damaged, everything that’s done in the near term to support demand may ultimately be to no avail. Weaker production will ultimately erode tax revenues, increase the budget deficit and require a future government to borrow even more than Johnson, Hunt or Jeremy Corbyn are currently planning.

Given that government borrowing costs are currently very low, a bigger budget deficit won’t be so difficult to fund. Yet for all the claims that we’re on the verge of taking back control, we shouldn’t forget that our living standards depend a great deal on what others think of us, in terms of investment, jobs and sterling’s value on foreign exchanges. How we pay for Brexit will ultimately be determined as much by them as by us.