‘Hard Brexit’ from single market could cost Britain US$81 billion a year, leaked report says
A leaked British government report said Tuesday that a “hard Brexit” — Britain leaving the European Union’s single market — could lose the country up to US$81 billion a year.
The United Kingdom’s economic output could fall up to 9.5 per cent if the country leaves the single market — which allows EU members to trade with each other without restrictions — the Times of London reported, citing a draft government paper.
“The Treasury estimates that UK GDP would be between 5.4 per cent and 9.5 per cent of GDP lower after 15 years if we left the EU with no successor arrangement, with a central estimate of 7.5 per cent,” the report says, according to the Times.
It added: “In headline terms, a) trade would be around a fifth lower than it otherwise would have been; b) foreign direct investment would also be around a fifth lower and c) the level of productivity would be driven down by these reductions in trade and investment causing an overall reduction in the economy’s efficiency in the long run.”
The report assumed that if the UK does leave the single market it would use rules set up by the World Trade Organisation, which deals with the global rules of trade between countries.
“This is yet more proof that hard Brexit would be an act of sheer economic vandalism,” said Tim Farron, the leader of the opposition Liberal Democrats.
“We cannot stand by while this reckless, divisive and uncaring Conservative government wrecks the UK economy,” he added.
Some senior Brexit supporters were not happy with the “worst case scenario” report’s conclusions, saying it did not assume that any existing trade deals would continue, and that the Treasury was using scare tactics, the Times reported.
Official figures showed that British retail sales in July smashed expectations following the Brexit vote, jumping 1.4 per cent compared with the previous month. Retail sales fell in August compared to July but at almost 6 per cent higher than the same period last year, were better than forecast.
The UK voted to leave the EU at a referendum in June. Prime Minister Theresa May has said she will trigger the Brexit process by the end of March 2017.
Britain’s High Court will hear a case in the coming days to determine whether May can act unilaterally to trigger Article 50 of the Lisbon Treaty — which begins the exit process — without a vote taking place in Parliament.
Rob Ford, a professor of political science at Manchester University, told Bloomberg that the case could delay the process by over a year.
“Remember, the government does not have anything near a majority in the House of Lords, so it would be perfectly possible for Labour or Liberal Democrat peers, who are overwhelmingly in favour of remaining, to block any Article 50 triggering,” he said.