‘Brexit’ could wipe 2.2% off the UK’s GDP

Financial Mirror (Cyprus) - - FRONT PAGE -

Leav­ing the EU could dam­age Bri­tain’s econ­omy, ac­cord­ing to a ma­jor new re­port from a lead­ing think tank.

The Open Europe re­port re­leased on Mon­day said that the worst case sce­nario for the UK would see the coun­try leave the EU, and then fail to strike a free trade deal. In this sce­nario, GDP would be 2.2% lower by 2030 than if the UK had re­mained in the EU.

Con­ser­va­tive Prime Min­is­ter David Cameron has pledged to hold an in/out ref­er­en­dum on EU membership if he wins the gen­eral elec­tion on 7 May.

The re­port also lays out a best case sce­nario for the UK. The sign­ing of a free trade deal with the EU fol­lowed by the ag­gres­sive pur­suit of dereg­u­la­tion and open­ing up to global free trade could see GDP rise by 1.6%.

In the event of a Brexit, all EU laws would re­main on the statue books un­til they were ac­tively re­pealed. Although Open Europe es­ti­mates the cost of reg­u­la­tion to be­tween 0.7 - 1.3% of GDP, cur­rent ev­i­dence sug­gests most laws would be kept in place.


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is be­tween a 0.8% loss and a 0.6% gain.

“Brexit is un­likely to be the cat­a­clysmic event some have claimed,” said Open Europe’s Chair­man, Lord Leach of Fair­ford. “How­ever, trans­form­ing Bri­tain into the dereg­u­lated, free trad­ing econ­omy it would need to be­come out­side the EU sounds easy in the­ory, but in prac­tice could come up against some se­ri­ous po­lit­i­cal re­sis­tance within the UK it­self.”

Not least in the area of labour mar­ket lib­er­al­i­sa­tion. The re­port claims in or­der for the UK to re­main com­pet­i­tive out­side the EU it would need to adopt lib­eral labour mar­ket poli­cies.

With much of the Euroscep­tic nar­ra­tive fo­cus­ing on the is­sue of im­mi­gra­tion, it is un­likely such moves would prove po­lit­i­cally popular.

High­light­ing the dif­fi­culty and un­cer­tainty of any exit, the re­port claims, “If the UK puts as much ef­fort into re­form­ing the EU as it would have to in or­der to make a suc­cess of Brexit, the UK and the EU would both be bet­ter off.”

The only es­tab­lished method for leav­ing the EU is un­der Ar­ti­cle 50 of the Lis­bon Treaty. The Ar­ti­cle gives the EU full con­trol over the timetable of any exit ne­go­ti­a­tions. It doesn’t pro­vide any op­por­tu­nity for the leav­ing mem­ber state to be in­volved in exit ne­go­ti­a­tions. In­stead, two years af­ter trig­ger­ing the ar­ti­cle they are pre­sented with a ‘take it or leave it’ deal.

Speak­ing to Sky News to­day, Shadow Chan­cel­lor Ed Balls said that any po­ten­tial ref­er­en­dum on EU membership would be a “dis­as­ter”.

“We are play­ing fast and loose with some­thing im­por­tant – our stand­ing in Europe,” said Balls.

Chan­cel­lor Ge­orge Os­borne told the same pro­gramme most vot­ers agreed with his fel­low Tories on the need for a rene­go­ti­a­tion and ref­er­en­dum.

Lucy Thomas, of the pro-EU lobby group Busi­ness for New Europe said that the re­port showed the un­cer­tainty sur­round­ing any exit from the EU. “At worst, the UK could lose more each year than we cur­rently spend on de­fence. At best, there could be some kind of free trade deal, but would still have to ap­ply many EU rules, with no say over what they were.”

But Robert Ox­ley, from Busi­ness for Bri­tain said: “This re­port makes clear that if Bri­tain did ever vote to leave the EU, its eco­nomic fu­ture would be in its own hands, rather than sim­ply be­ing con­sumed by eco­nomic ar­maged­don, as is too of­ten pre­dicted by the In-at-all-costs brigade. Those cherry pick­ing the facts from the re­port are show­ing they are more in­ter­ested in scare­mon­ger­ing than an ac­tual de­bate about the facts of Bri­tain’s EU fu­ture.”


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