Economy to suffer for 15 years after UK quits EU - government
Under May's deal economy will shrink by 3.9% over 15 years
No-deal Brexit would see around 9.3% fall in GDP
The British economy will shrink over the 15 years following the UK’s departure from the European Union, regardless of what deal the country leaves under, UK government research claimed on Wednesday.
The government has published a detailed economic analysis of what it believes the impact will be of quitting the EU under a range of scenarios, including one similar to the deal agreed between Downing Street and Brussels.
The report – produced by economists from across government departments – stressed it was not an economic forecast, nor did it model an exact representation of Theresa May’s deal.
But under the scenario that most closely resembles it, the report believes the economy will shrink by 3.9% over the next 15 years, as trade barriers hit goods and services and migration falls. That figure also takes into account what the report termed sensitivities, such as friction at borders.
That is thought to represent around £1,100 per person or a hit of around £100bn over the 15 years.
In the event of a no-deal exit, the economy would be between 10.7% and 8% worse off, or 9.3% on average, the report said, while a Canada-style free trade deal would leave the economy 6.7% smaller.
Under the Chequers Plan, which was rejected following opposition from the right of the Conservative party, GDP would be 0.6% lower. That assumes, however, there would no reduction in migration of EU workers and no increased customs costs.
Under every scenario, public sector borrowing is set to increase, and most sectors – including manufacturing, food production and financial services – will be worse off.
The highly-anticipated report follows comments made by Chancellor of the Exchequer Phillip Hammond earlier on Wednesday. He told the BBC that the economy would suffer under every method of leaving the EU, arguing: “If you look at this purely from the economic point of view, there will be a cost to leaving the EU because there will impediments to trade.”
But he backed May’s deal, saying it would minimise the economic impact while providing “economic benefits”.
Rain Newton-Smith, chief economist at the CBI, backed the Prime Minister's deal, arguing that the report "paints a bleak picture over the long term of no deal Brexit or Canada-style deal. It surely puts to bed some of the more far-fetched ideas that a hard landing Brexit will not seriously hurt the economy."
Parliament is due to vote on the deal on 11 December.