August 18, 2019, 23:13


Official Forecast: UK GDP Significantly Worse Off Under All Brexit Scenarios

Official Forecast: UK GDP Significantly Worse Off Under All Brexit Scenarios

The UK would be significantly worse off under all possible Brexit scenarios in 15 years’ time according to a benchmark economic analysis produced by a number of government departments – in the event of a ‘no deal’ Brexit, the British economy will be 7.7 percent smaller.

Whitehall officials modelled several plausible scenarios — and Chancellor Philip Hammond said the UK would be worse off post-Brexit “if you look at this purely from an economic point of view” — although no scenario followed the deal Prime Minister Theresa May agreed with EU officials. The Chequers scenario — with 50 percent higher non-tariff barriers — concluded GDP would be 2.1 percent lower in 2035/36.

The Norway EEA scenario, favoured in some quarters, would see GDP contract by 1.4 percent in 15 years’ time, while under a Canada-style deal, advocated by Boris Johnson and David Davis, the UK would be 4.9 percent worse off.

CC0 / PixabayBrexit All scenarios were based on the assumption EU migration rules remain roughly unchanged after secession — and the UK succeeds in signing free trade deals with the United States and other major non-EU economies such as China, India and Australia. If migration rules are tightened, resulting in zero net migration from the European Union and the European Economic Area, GDP would be 1.8 percent lower in 2035/36.

A regional breakdown showedthe north-east of England would be worst affected by leaving the EU  in a no-deal scenario, followed by the West Midlands, the North-West and Northern Ireland. In the best-case scenario, London and the south-east would be the worst affected, although the overall GDP impact would be lower. Scotland, Wales and Northern Ireland would be least affected.

In response, former Brexit secretary David Davis said prior Treasury forecasts “have almost never been right and have more often been dramatically wrong.” Predictions the UK economy would contract by 2.1 percent in the 18 months after a Brexit leave vote were unfounded, he added, as the UK economy has in fact grown 2.8 percent.

 

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