Government Admits May’s Brexit Will Hurt Economy
The Brexit saga has been strewn with lies, false promise and exaggeration, to an extent, on both sides of the argument, but in the main from those pushing for a schism between the UK and its largest and closest trading partner. The biggest lie was that somehow the UK could leave the bloc, cease paying into it or following EU directives (laws) and still enjoy the perks of single market membership because “they need us more than we need them” – the “cakeism” of Boris Johnson (“I am pro-cake and pro-eating it”). The reality was always going to be different.
By definition, if the UK leaves the EU it will be leaving the advantages of frictionless trade and full access for financial services (an issue that seems to have been deliberately overlooked of late), imposing non-tariff barriers at the very least and changing the fundamental nature of the trading relationship between the UK and her EU partners. This was always going to hurt the economy, but was deflected by talk of a “deep and special” relationship, a desire for frictionless trade (whilst throwing sand in to the wheels of commerce) and maintaining ties with our friends on the continent.
Now that the UK and the EU have agreed on the withdrawal deal, the government has published the likely economic costs of the various Brexit modalities (based on the Chequers model rather than the version signed which is regarded as less favourable to the UK). Unsurprisingly, they show that even in the most benign circumstances the UK economy will take a significant hit.
The government has produced an 82-page cross departmental document which looks at three scenarios: a Norway-style EEA membership; the Chequers model (better than the current scenario) and a “no deal” Brexit. The hit that the UK economy is projected to take in these cases is £60 billion, £100 billion or £200 billion per annum. The report models the influence of various scenarios on GDP in 15 years. It concludes that “no deal” results in a 9.3% contraction in GDP; a free trade agreement produces a 6.7% hit; the Chequers plan produces a contraction of 3.9%; and a white paper with alternative trade scenarios (external trade deals) yields a 2.5% contraction. Whilst the numbers may sound small, they relate to a UK GDP worth (currently) about £2.3 trillion, so 1% is worth £23 billion.
A Sky TV survey found that 19% of respondents thought that Mrs May’s deal is worth the hit to the economy whilst 63% said it was not.