Brexit will make Britain worse off, government analysis shows
Britain will be worse off under all plausible scenarios when it leaves the EU, confidential analysis produced for the government shows.
A paper being circulated among cabinet ministers estimates UK growth would be 5% lower under a comprehensive free trade agreement with the EU over the next 15 years compared with staying in the EU. If there is no deal and the UK reverts to World Trade Organization rules, growth would be 8% lower.
The softest option of continued access to the single market as a member of the European Economic Area would reduce growth by 2%, according to the paper, "EU Exit Analysis – Cross Whitehall Briefing".
Almost all industries and every region would lose out in all three scenarios. Chemicals, clothing, manufacturing, food and drink, cars and retail would be the worst-affected sectors. Under WTO rules only agriculture would not be harmed. England's North East and West Midlands regions and Northern Ireland would bear the brunt of reduced economic growth, the report said.
London's status as a financial centre could also be severely reduced under a free-trade agreement and WTO scenarios. The analysis assumes a trade deal with the US under all scenarios with a 0.2% benefit for output over the long term.
The calculations, dated January 2018, were prepared by officials across the government for the Department for Exiting the European Union and were reported by BuzzFeed. A source at the department told BuzzFeed that Prime Minister Theresa May was keeping the analysis from the public because it was embarrassing.
The government has faced repeated questions about its assumptions for the economic impact of Brexit. The Brexit secretary, David Davis, claimed there were detailed impact assessments that he refused to reveal to MPs. In December 2017 he told MPs the assessments did not exist after all.
The latest projections paint a slightly healthier picture of the economy outside the EU than Treasury forecasts before the 2016 referendum. That analysis predicted growth would be 7.5% lower growth under WTO rules, 6.2% lower with a free trade agreement and 3.7% less with access to the single market. The leave campaign accused the Treasury of scaremongering and described the analysis as "Project Fear".