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FINANCE EXPERT ON HOW U.K. WILL SUFFER Warning over dent in wages every person will face after EU divorce
Fraser of Allander Institute director Graeme Roy also warned that crashing out of the EU without a deal would create an “unprecedented structural shock” with the impact on jobs and living standards diff icult to even quantify.
He spoke to the Sunday Mail days af ter the Prime Minister’s own Treasury officials revealed leaving the trading bloc will rip £139billion out of the UK economy and damage public services.
Roy, whose team at Strathclyde University have used computer modelling to predict different Brexit deal outcomes, said: “The bigger the barriers you put up between you and your largest trading partners, the greater the hit to your economy in the long run.
“If you’re in a Norwaystyle model where you are still in the single ma rk e t , then the barriers are less and the hit to the economy is less than it would be if you go down a no-deal route with World Trade Organisation ( WTO) rules.
“In a Norway model, we’d be looking at a two per cent hit to GDP and in terms of wages, that is between £800 and £1200 per person on average full-time earnings.
“If you look at the WTO model, you’re into a hit of five per cent to wages and that is about £2000 a year. The deal May is suggesting is in the middle of that.
“If you take the Treasury figures they’re saying no deal could lead to a nine per cent hit and a free trade deal similar to May’s could mean a four per cent hit. So their predictions are a bit worse than ours.”
Roy warned that greater trade barriers would impact on jobs as well as earnings with no deal leading to the possibility of up to 90,000 posts going across the country.
He added: “Our studies have modelled the number of jobs supported by the EU and we found that 130,000 jobs in Scotland and 40,000 in the Glasgow region are supported by the EU.
“There will still be trade so they won’t all be lost but these are the jobs which have a risk factor attached to them.
“Another study we ran found that a Norway model arrangement with the EU could cost around 30,000 after 10 years with approximately 90,000 under the most extreme scenario. Again, May’s deal will lieie somewhere between those two figures.”res.”
Roy said: “Scotland is slightly less exposedd to Brexit in that we export a smaller amount to the EU than the rest of the UK does.
“But this varies greatly from sector to sector.
“Fishing is very much connected to the EU and, while Brexit may get rid of quotas, it could create d amag i n g e x p or t barriers.
“Immigration i s a lso a big concer n for future economic growth.
“We have a shrinking population projection for coming yea rs and , if migration becomes more difficult, then Scotland will be disproportionately hit.
“Overall, the impact of Brexit wi l l be negat ive and any difference with the UK will be at the margins.”
Wh i le none of t he predictions made by Roy’s team paints a positive picture, he refused to even speculate on the potential impact of crashing out of the EU in March without a deal and without a transition period. He added: “These projections are all based on what happens over the long term. If there is no deal and we crash out in March, it would be very hard to predict how that would go because there’s no precedent for the sort of structural shock to the economy that dislocating process would involve.
“Anyone brave enough to put a number to that is braver than me – but it would be negative.
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