Brexit ‘will make Britain poorer over 15 years under all possible scenarios’, Government’s impact report finds

The UK will become poorer over 15 years after Brexit under all possible scenarios, according to the Government’s analysis. 

The Whitehall analysis found that economic growth would be hit by any of the existing models for a future relationship with the EU – a Norway-type European Economic Area (EEA) model; a free tradeagreement; or World Trade Organisation (WTO) rules.

Even in the best scenario – retaining access to the single market through membership of the EEA – GDP could decline by 1.6 per cent, according to the analysis published on Thursday.

It also quashes claims that the Government would benefit from a “Brexit dividend”, instead showing a rise in annual borrowing under all scenarios.

Parliament’s Brexit committee published the impact report on Thursday following a battle over Government secrecy. Brexit secretary David Davis resisted its release but in January MPs voted for the document to be published in full.

Hilary Benn said the analysis suggests Brexit will have an ‘adverse effect’ on the economy (Neil Hall/Reuters)

Sections of the report were leaked to Buzzfeed earlier this year.

But Government rejected the conclusions at the time of the leak, witha source reportedly saying the study does not take into account “the details of our desired outcome – a new deep and special partnership with the EU – or predict the conclusions of the negotiations”.

Brexit committee chair, Labour MP Hilary Benn, said on Thursday the analysis suggests Britain’s exit from the EU will have an “adverse effect” on the economy.

He said: “The results of this analysis, undertaken by the government with the aim of quantifying the potential impact of leaving the EU on the British economy, are already largely in the public domain in one form or another.

“Allowing this information to be considered in its full context, rather than selectively quoted, will help properly to inform public debate about how the figures were arrived at and what the economic effects of Brexit might be.

“The analysis suggests there will be an adverse effect on the economy of the UK and all its regions, and that the degree of impact will depend on the outcome achieved in the negotiations.”

The study found under the worst scenario – if Britain left without a deal and was forced to fall back on WTO rules – GDP could decline by a cumulative 7.7 per cent over 15 years, while under a free trade agreement it could fall by 4.8 per cent.

Even in the best scenario GDP could decline by 1.6 per cent, according to the analysis

It also considered the regional impact of Brexit under the scenarios, with the north east of England likely to suffer most economically, and London least.

And analysis into the estimated impact of the possible outcomes on government borrowing showed Government would not benefit from a Brexit dividend.

While the Treasury would no longer have to pay into the EU budget, the report suggests this would not compensate for the amount the exchequer would lose.

After 15 years annual net borrowing would be around £20bn higher under the EEA option, £60bn higher under the free trade agreement option and more than £80bn higher under the WTO option.

A graph shows annual change in borrowing after Brexit in all scenarios

However, pro-Brexit MPs questioned the validity of the forecasts. Jacob Rees-Mogg, chair of the backbench European Research Group, said the research had been “so widely leaked and ridiculed for its approach that it is of little consequence”, according to The Guardian.

He previously said the findings were “highly speculative”.

In the report, Whitehouse officials warn that the analysis is “highly uncertain”, and suggest “analysing the potential impact of different exit scenarios is an unprecedented challenge”.

Despite this, campaigners have claimed the report shows Prime Minister Theresa May is pursuing Brexit in the knowledge that it will harm the economy.

Labour MP Chris Leslie, leading supporter of campaign group Open Britain, said: “The government can no longer conceal the grim fact that they are leading us to a new era of austerity. As new facts like these emerge about the monumental costs of Brexit, everyone is right to keep an open mind about whether it is all worth it.”

Standard.co.uk

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