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Brexit

UK significantly worse off under all possible Brexit scenarios, official forecast shows

  • Document compiled by British government departments shows GDP could be as much as 10.7 per cent lower in 15 years
PUBLISHED : Wednesday, 28 November, 2018, 9:43pm
UPDATED : Wednesday, 28 November, 2018, 9:50pm

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 range of government departments including the Treasury.

The keenly-anticipated document concludes that GDP would be 0.6 per cent lower under the Chequers plan in 2035/36 – although that has been ditched after a revolt from the Tory right – and 7.7 per cent lower in the event the UK crashes out with no deal.

In the worst case of all the scenarios modelled, GDP would be 10.7 per cent lower in 15 years’ time, assuming there is no longer any net migration from the EU and EEA.

Remarkably, none of the scenarios modelled exactly approximate to May’s deal agreed over the weekend. But the analysts produced a scenario based on Chequers with 50 per cent higher non-tariff barriers to help with comparison. That held that GDP would be 2.1 per cent lower in 2035/36.

The analysis also concluded that:

• Under a Norway EEA scenario, GDP would be 1.4 per cent lower in 15 years’ time, worse than the additional scenario produced after May’s deal was signed over the weekend.

• Under a Canada-style deal, supported by Boris Johnson and David Davis, the UK would be 4.9 per cent worse off, the study concludes.

All scenarios were based on an assumption that EU migration rules remain unchanged. If migration rules are dramatically tightened up, to the point where there is zero net migration from the European Union and the European Economic Area GDP would be 1.8 per cent lower.

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A regional breakdown also showed that in a no-deal scenario, the north-east of England would be worst affected, followed by the West Midlands, the north-west and Northern Ireland. London would easily be the least affected.

In the best case Chequers scenario, London and the south-east would be the worst affected, although the overall GDP impact would be much lower. Scotland, Wales and Northern Ireland would be the least affected.