EU Exit Analysis - Brexit to Damage UK Growth
No one said that leaving the EU was going to be easy, but was it meant to be this embarrassing? In yet another blunder for the government, a leaked document has stated that Brexit would leave the UK worse off under three possible scenarios: a fully-fledged trade deal, access to the single market and no deal at all.
The leaked government document which analysed the economic impact of Brexit, entitled: EU Exit Analysis – Cross Whitehall Briefing, and drawn up for the Department for Exiting the EU, suggests that almost every part of the economy would suffer.
The analysis which was sent across to Buzzfeed, states that national income would be 8% lower under a no deal scenario, nearly 5% lower with a free trade deal with the EU, and about 2% lower with a soft Brexit alternative of single market membership over the next 15 years. The analysis also states that every UK region would also be affected by the three scenarios, with the North East, the West Midlands and Northern Ireland facing the biggest losses in economic performance.
The document goes on to suggest that chemicals, clothing, manufacturing, food and drink, car and retail sectors would be the hardest hit sectors across the regions.
According to Buzzfeed, the leaked document assumes that all scenarios will be concluded with a trade deal with the US, which would contribute 0.2% of the UK’s GDP in the long term. Other trade deals with non-EU countries such as India, China, Australia, the Middle East and Southeast Asian countries would benefit GDP by up to 0.4% in the long term.
There have been calls from the Remainer camp for the government to release the full analysis to the public, however they have refused to comment about publishing the information, as it would undermine Britain’s negotiating position, because it confirms that remaining in the single market would cause the least amount of economic damage. Prime minister Theresa May is looking to negotiate a deal between a traditional free trade agreement and a Norway-style market deal. This is, however, bespoke so there’s no modelling for the outcome.
A government spokesperson said: “We have been clear that we are not prepared to provide a running commentary on any aspect of this ongoing internal work and that ministers have a duty not to publish anything that could risk exposing our negotiating position.”
As expected, the Leave EU camp remain optimistic, despite this latest blunder. Former Conservative party leader and member of the Leave campaign, Iain Duncan-Smith, told BBC Radio 4’s Today programme that the analysis should be taken “with a pinch of salt” and that the timing of the leak was “highly suspicious.”
“I would observe that almost every single forecast coming from government, and most of the international organisations, have been completely wrong. You know, the IMF have been wrong,” he said. “It was forecast for example that if we voted to leave we’d have half a million job losses, the economy itself would be close to a crash, and that we would all suffer, and in fact, none of that’s come true.”
Despite the government’s reluctance to publish the leaked analysis in its entirety, calls for it to be published still persist. Labour MP Chris Leslie and supporter of the Open Britain group campaigning against a hard Brexit has called for the full report to be released to the public. “It’s little wonder the government has repeatedly refused to publish any serious Brexit analysis,” he said. “Their own impact assessments underline what has long been obvious, that their reckless plan to crash out of the single market and the customs union will leave us all much worse off. There is no mandate for this hard and destructive Brexit. No one voted to make themselves or their families worse off.”
Another Remainer, Eloise Todd, the chief executive of anti-Brexit organisation Best for Britain, said: “According to the government’s secret analysis, even the softest Brexit scenario will mean a 2% hit to growth.
“Almost every community, region and sector of the economy included in the analysis would be negatively impacted. The case for or against Brexit should be about more than balance sheets, but it’s painfully clear that the numbers are a gloomy part of the story. And behind these numbers are thousands of jobs, businesses and homes that are at risk.
“The government are calling this document embarrassing but it’s more than that. It is a colossal act of economic self-harm, written down clearly, in black and white. We are reading about an economy facing the abyss.”
The full analysis will be shared by ministers within the next couple of weeks, which also acknowledges the risk to London’s status as a financial centre: with the EU stating that the City will not be covered by any free trade agreement. In response, Mayor of London Sadiq Khan said that the leak showed the need for the government to “urgently change course” and make staying in the single market and customs union its top priority.