UK to Be Worse Off In Every Scenario
LONDON (Dispatches) - The U.K. would be worse off in every scenario should it proceed with Brexit, according to a leaked government analysis of the economic impact of leaving the EU.
The analysis, titled “EU Exit Analysis - Cross Whitehall Briefing” and dated January 2018, looked at three possible scenarios: a no-deal scenario, in which the U.K. would revert to World Trade Organization (WTO) rules, a comprehensive free-trade deal with the EU and a continued single-market access through a European Economic Area membership.
The document, which was meant to be shown confidentially to cabinet ministers this week, was leaked in what was described as an “embarrassing” development to Prime Minister Theresa May and Brexit Secretary David Davis.
Under a no-deal scenario, the U.K. would see economic growth reduced by 8 percent.
Under a comprehensive free trade agreement with the EU, growth would be reduced by 5 percent over the next 15 years. However, if the U.K. retained access to the single market and be a European Economic Area member, economic growth would be reduced by only 2 percent.
Nonetheless, the impact assessment does not take into account the short-term effects that Brexit will have on the economy, such as adjusting the economy to new customs arrangements and rules, which could prove worse than the aforementioned statistics.
When looking at the sectors most affected, the document stated that manufacturing, retail, cars, food and drink, and chemicals would all face negative effects in all three scenarios.
All regions of the U.K. would also be affected negatively, with the northeast, the West Midlands and Northern Ireland facing the biggest declines in economic performance.