No- deal Brexit ‘ three times worse for economy than virus’
FAILURE TO reach an agreement with the EU in post- Brexit trade talks could hit Britain’s economy three times harder in the long term than coronavirus, a think tank has warned.
Queues at the border, shortages of fresh food and medicine as well as more “hassle” travelling to the continent are also possible, according to the UK in a Changing Europe group. A report by the organisation, based on modelling with the London School of Economics, said the impacts of coronavirus may mitigate or obscure the impact of a no- deal exit.
But it warned that not forming an agreement with Brussels would have a significant impact in the long term.
Professor Anand Menon, who grew up in Wakefield and is director of the UK in a Changing
Europe, said: “While the Prime Minister said no deal is a ‘ good outcome’ our report shows that it may lead to significant disruption and will have a significant negative economic impact. As significant will be the political fallout of no deal, particularly with the UK and EU, but also inside the UK, particularly Northern Ireland, and internationally too.”
The authors wrote: “The claim that the economic impacts of Covid- 19 dwarf those of Brexit is almost certainly correct in the short term. Not even the most pessimistic scenarios suggest a no- deal Brexit would lead to a fall in output comparable to that seen in the second quarter of 2020. However – assuming a reasonably strong recovery, and that government policies succeed in avoiding persistent mass unemployment – in the long run, Brexit is likely to be more significant. Our modelling of the impact of a nodeal Brexit suggests that the total cost to the UK economy over the longer term will be two to three times as large as that implied by the Bank of England’s forecast for the impact of Covid- 19.”
It comes as controversial Brexit legislation enabling the UK to break international law cleared a major Commons hurdle last night after MPs backed a Government compromise.
Tory backbench pressure forced the Prime Minister to agree to amend the United Kingdom Internal Market Bill in order to give MPs a vote before the Government can use powers which would breach the Brexit divorce deal brokered with Brussels last year.