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UK to be worse off with Brexit, warns new analysis

PTI | Updated on: 28 Nov 2018, 10:12:23 PM
British Prime Minister Theresa May (File Photo)

London:

The UK will be worse off economically under any form of Brexit, a new government analysis warned on Wednesday.

The gloomy economic prospect for Britain outside the 28-member European Union forms part of the UK Treasury’s outlook on the country’s finances under different scenarios of exit, compared with staying in the EU.

Leaving under the current controversial Withdrawal Agreement, or divorce pact, struck by Prime Minister Theresa May is only marginally better than other prospects, with the UK economy expected to be 3.9 per cent smaller after 15 years if it leaves under the arrangements being formalised now.

But comparatively, crashing out of the economic bloc in a no-deal Brexit scenario could deliver a 9.3 per cent hit to the economy, the Treasury estimates say.

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“Our deal is the best deal available for jobs and our economy, that allows us to honour the referendum and realise the opportunities of Brexit,” May told MPs in the House of Commons on Wednesday, as she continued to garner support in time for a crucial parliamentary vote over the Withdrawal Agreement on December 11.

She is also touring the country as part of her plans to win support for the deal and is headed to Scotland later on Wednesday.

However, her task will no doubt be made tougher as the new Treasury analysis outlined that trade will be reduced under her deal, causing a 0.7 per cent reduction in GDP compared to today’s arrangements. Nearly every region of the country will be worse off in 15 years’ time than if the UK stayed in the EU, with London suffering the greatest damage, the analysis finds.

While anti-Brexit MPs seized on the findings to highlight that the UK will be worse off as a non-member of the EU, the pro-Brexit lobby dismissed the analysis as another version of “Project Fear” - a phrase coined for gloomy economic forecasts in the lead up to the June 2016 Brexit referendum.

“There is an economic credibility gap with all these Treasury-led forecasts, based on their track record of failure, the questionable assumptions they rely on, and the inherent challenge of making reliable long-term forecasts,” said Dominic Raab, who resigned as Brexit Secretary earlier this month in protest against May’s Withdrawal Agreement struck with the EU.

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“Politically, it looks like a rehash of Project Fear. People expect to be inspired, not scared witless into deferring to the government,” he said.

Another former Brexit Secretary, David Davis, also questioned the research, saying previous Treasury forecasts had been proved wrong and were based on “flawed assumptions”.

The Treasury estimates do not put a cash figure on the potential impact on the economy, but independent experts have said that 3.9 per cent of GDP would equate to about 100 billion pounds a year by the 2030s.

“There will be a cost to leaving the European Union, because there will be impediments to our trade? The economy will be slightly smaller in the prime minister’s preferred version of the future partnership,” admitted UK Chancellor Philip Hammond but added that staying in the EU was not politically “viable”.

The 83-page document was drawn up by officials from across UK departments, including the Treasury, the Department for Exiting the EU, industry, environment, international trade and the Home Office.

Britain is scheduled to leave the EU on March 29 next year under the Article 50 process set in motion after the 2016 referendum. Under the deal struck by Premier May with the EU, the UK would be able to negotiate trade deals with other countries, including India, during the transition period after Brexit day, but would not be able to implement them until the end of the planned 21-month transition period, which itself could be extended.

There is widespread opposition to the current deal over various clauses, with serious doubts over it being cleared by Parliament next month.

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First Published : 28 Nov 2018, 10:12:12 PM

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